The National Bank of Hungary is expected to cut the base rate by 50bps to 7.25%.
Deputy Governor Virag's most recent comments on the policy path were typically direct, and leant against any outside expectations that the NBH could further slow the pace of their easing path as soon as Tuesday's rate decision. The deputy governor made clear that he expects a further 75-100bps of rate cuts across the first half of this year, before a slower pace of easing could be enacted into year-end. This leaves a 50bps rate cut in May and either a 25 or 50bps rate cut in June as the most probable outcomes at this juncture.
Inflation Developments Warrant Caution, Forint Rally Eases Pressure
Inflation data for April registered in line with expectations, rising 0.7% M/M and equating to a year-on-year print of +3.7% up from the prior level of +3.7%). Perhaps more importantly for monetary policy, forint developments over the past month justify a more comfortable backdrop for the committee as we approach the May decision. EURHUF trades roughly 2.5% below April's peak around 385.
