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MNI NBH Preview - July 2023: Rate Convergence Set to Continue

Executive Summary:

  • Top end of rate corridor seen dropping another 100bps
  • Base rate, deposit rate convergence fast approaching in September
  • Virag steered markets clear of faster pace for rate cuts
Full preview including summary of sell-side views here:

MNINBHPrevJul23.pdf

The NBH are expected to carry on the gradual process of policy rate normalisation. In June, the central bank said the still favourable risk environment allowed the effective rate to be cut a further 100bps to 16%.
At this pace, the two rates will converge by the end of September. In its June policy statement, the NBH said “maintaining the current level of the base rate will ensure that inflation expectations are anchored and the inflation target is achieved in a sustainable manner”, a slight shift in language from the May edition which said “it is necessary to maintain the current level of the base rate over a prolonged period, which will ensure that inflation expectations are anchored and the inflation target is achieved in a sustainable manner.”
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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