Hungary’s easing cycle has further to run

The weak inflation outlook and prospects for slower growth mean Hungary’s easing cycle, which resumed today, has further to run – we anticipate a few more small rate reductions in the coming months. Meanwhile, the Bank became the first EM central bank to dip its toe into the world of negative interest rates, lowering its overnight deposit rate to -0.05%. But in practice it is the benchmark rate which will play a much greater role in determining monetary conditions.