Hungary ends the easing cycle

The National Bank of Hungary (NBH) cut rates by 15bp at its MPC meeting this week. After 75bp of cuts over five consecutive meetings, the NBH signalled that it was ending its cutting cycle in the July MPC meeting. 

The bank argues that "a cautious approach to monetary policy is warranted due to uncertainty in the global financial environment", as opposed to "the medium-term achievement of the inflation target points to the direction of further, slight easing of the policy rate" in the June statement. 

The NBH, however, notes the risks to the inflation outlook, with it rising only slowly towards its 3% target by the end of its forecast period. 

"Low levels of capacity utilisation, especially in Hungary's export markets, as well as an output gap that is closing only gradually, imply that the NBH will keep policy loose for an extended period", says Barclays.