You are here: main page _ Economy
Economy
City major cuts Hungary rates trough forecast
Monday 16:24, October 26th, 2009
Hungary's policy rate is set to trough lower next year than previously anticipated as consumer inflation figures keep surprising markets on the downside, a major City-based investment group said in its latest country forecast update.

JP Morgan said it is revising down its MNB policy rate forecast by 50bps to 5.50% in response to unexpectedly low inflation and weaker real activity data in recent months.

“We now expect the MNB to cut to 5.50% by 1Q10 (previously 6.00%), with risks skewed further to the downside if the forint appreciates further early next year ... purely from the perspective inflation and the depth of Hungary's recession, even sub-5.50% rates would probably be justified.”

A reversal of positive risk appetite and potentially negative news on the 2010 budget remain the key risks to more aggressive MNB easing, JP Morgan said.

Despite a substantial hike in indirect taxes at the start of July, CPI inflation has picked up only modestly, reflecting weak pricing power against a backdrop of sharply contracting domestic demand, amplified by unexpectedly sharp food price declines.

Based on all this, JP Morgan said it has revised its year-end CPI forecast for 2009 to 5.5% year-on-year from 5.8% and continues to see inflation falling below the MNB's 3% target in the second half of 2010. Its end-2010 CPI forecast is 2.8%, it added. (MTI-ECONEWS)

Portfolio
  • 24H
  • Most popular
  • Stories of last week
  • BUX
  • FTSE
  • NASDAQ
  • NIKKEI
  • DOW
Contemporary Art - Order now!
ADVERTISEMENT

AKK cuts offer at T-bill auction because of scattered yields, not demand

16:25, Sep 2 | Hungary's Government Debt Management Center (AKK) cut its offer at an auction of twelve-month T-bills on Thursday not because of demand, but because of scattered yields in bids, AKK deputy-director László András Borbély told Econews.

Hungary needs to convince Commission extension of farmland ban is necessary

14:39, Sep 2 | Hungary will have to convince the European Commission that an extension of the country's ban on purchases of farmland by foreigners is necessary to prevent serious disturbances in the agriculture sector, Commission spokesman Roger Waite told MTI in Brussels on Wednesday.