Central European Daily

The National Bank of Hungary cut its base rate by 15bp from 2.85% to 2.7% vs. market expectation of 10bp moderation. The forint reacted on the decision with substantial weakening. There was no change in the view of the council regarding the judgment of the current economic situation and outlook. The statement highlighted that although the economy shows increase of activity, the growth level may remain below the potential level till the relevant time horizon of NBH. Despite the underlying inflation capturing the medium term outlook – measured by the NBH – rose in January and also the private sector wage growth picked up, the Council expects disinflationary process thanks to the weak domestic demand and the low inflation in external markets.