3% base rate

The Monetary Council of the MNB cut the base rate by yet another 20bps to 3%. By this, monetary easing this year has amounted to 275bps whereas since last August it has been 400bps. T131217_kamathe course of easing has been enabled by relative global financial stability as well as by the sharp disinflation in Hungary. However, the latter might be weakened by a relatively high core inflation of 3.5% y-o-y in November.

In the coming months, we expect further rate cuts until a low at 2.8%. Further cuts should take place in 10bps steps. By the end of next year, however, we expect the base rate at 3% once again.