(Bloomberg) -- Hungary’s central bank is likely to extend its easing cycle after headline inflation came in lower than expected last month and the forint rallied to the highest level against the euro since early June.
The National Bank of Hungary will cut the benchmark rate by a quarter of a percentage point for a second meeting to 6.75%, according to 17 of 25 economists surveyed by Bloomberg. Eight analysts expect no change when policymakers meet on Tuesday.
Deputy Governor Barnabas Virag signaled last week that interest rates may be lowered on as many as three occasions this year, with the first such move potentially happening this month following an unexpectedly sharp slowdown in annual price growth in June. Policymakers have progressively reduced the size of the cuts this year, to just a quarter-point last month.
The central bank will announce its decision at 2 p.m. in Budapest, followed by a statement and briefing an hour later.
The forint strengthened against the euro on Monday ahead of the decision, adding to an advance that’s made it one of the best performing emerging market currencies over the past month.
Virag reiterated calls last week for cautious, patient monetary policy in the face of lingering inflation risks, but noted an improvement in global risk sentiment and the consumer-price index coming in within the target band. Hungary targets 3% inflation in the medium term, with a 1 percentage point tolerance band on either side.
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