The MNB cut the base rate to 2.6%

140325_MNB alapkamat_ENThe Monetary Council of the MNB decided in line with the market consensus to cut the base rate by 10bps to 2.6%. This is a deceleration of the easing cycle with respect to the 15bps cuts of January and February. The forint did not react too much to the cut, essentially staying around 311 against the euro. The Council said that as inflation stays well below the MNB’s mid-term target of 3% this year, the room for further easing was provided. In fact, in its new Inflation Report the MNB reduced its average inflation forecast for 2014 from 1.3% to 0.7%. Next year, however, will bring about 3% average inflation instead of the 2.8% earlier forecasted by the MNB according to the Report. The Council suggests in its communique that the end of the easing cycle should now be rather close.