Hungary cuts again, attention turns to new Governor

The impending change at the helm of Hungary’s central bank will lead to further cuts in interest rates over the coming months. But the scope for easing will be determined in large part by whether global risk appetite holds up. If sentiment turns, either due to a re-escalation of financial market tensions in the euro-zone or if the new-look MPC embarks upon more aggressive and/or unconventional policy, the Bank could ultimately be forced into defensive rate hikes to shore up the forint.