The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50% and, while this move alone won’t loosen monetary conditions, it is likely to be followed by cuts to the effective policy rate (the overnight daily deposit rate) in the coming months. The post-meeting communications reinforce our view that the daily deposit rate will be cut by 100bp in June (to 17.00%) and by a further 400bp (to 13.00%) by November.
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