Yet another 20bps cut by the MNB

131126_MNB alapkamat_ENThe MNB has cut its base rate by yet another 20bps to 3.2% today. The decision was in line with expectations, formulated in context of low inflation and relative forint stability, as well as globally low yields, supported by the November ECB cut and the weak US recovery. The communique of the Monetary Council says that further monetary easing is realistic if global financial conditions permit. We forecast a base rate of 2.8% at mid-2014, followed by a hike to 3% by December 2014.