2.85% base rate

After the 20bps December cut, the Monetar140121_MNB Alapkamat_ENy Council of the MNB reduced the base rate by 15bps, more than the 10bps market consensus. The official communique states the usual arguments: persistently low inflationary pressures, supportive international environment, below-potential domestic economic output. The MNB expects these circumstances to prevail, hence the easing cycle may continue further on. In this context, it is not clear where the bottom of the cycle may be, and neither is how inflationary dynamics will turn out once the cuts in regulated energy prices have come to an end.