(Bloomberg) -- Hungary is poised to deliver the penultimate interest rate cut on the back of a strengthening currency, before rebounding inflation puts an end to a year-long monetary easing cycle.

The National Bank of Hungary will lower the benchmark rate by a half-point to 7.25% on Tuesday, matching the pace in April and the estimate of all but one of 25 economists in a Bloomberg survey. That’s also roughly in line with money-market expectations based on forward rate agreements. 

The central bank will announce its decision at 2 p.m. in Budapest, followed by a statement and briefing an hour later.

Hungary started reducing rates from a peak of 18% a year ago, gradually slowing the pace of easing. But Deputy Governor Barnabas Virag said after April’s price-growth data that officials see “limited” room for cuts in the second half of this year once the key rate reaches between 6.75% and 7% by the end of June. 

The annual inflation rate, which rose to 3.7% in April, may exceed 4% in May or June and stay at that level until the end of the year before inflation begins to ebb again early next year, Virag said. The central bank has been keen to provide positive real interest rates to investors to anchor the forint, limiting its room for steeper key rate cuts going forward.

The rate caution and less pressure from Prime Minister Viktor Orban’s government for lower rates to bolster an economic recovery has helped the forint throughout May. 

The forint was trading around a more than a three-month high against the euro on Tuesday, even after Economy Minister Marton Nagy criticized the central bank for publicly skewering the government’s plans to boost competitiveness, according to an interview on Index news website published before the rate decision.

The currency’s strength supports a half-point benchmark cut on Tuesday and another reduction in June before a “sustained pause,” according to ING Groep NV.

“The forint has been remarkably strong since the central bank’s last decision, so both market stability and macro fundamentals would, in our view, justify maintaining the previous pace of rate cuts,” ING analysts, including Peter Virovacz and Frantisek Taborsky, said in a note.

--With assistance from Andras Gergely and Piotr Skolimowski.

(Updates with real interest rate in fifth paragraph, forint and Economy Minister in seventh.)

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