(Bloomberg) -- Hungary’s central bank is poised to maintain the pace of monetary easing, resisting government pressure for a bolder move in lowering the European Union’s highest borrowing costs.
The National Bank of Hungary will cut its main interest rate by 75 basis points to 11.5% on Tuesday, according to 18 of 20 economists in a Bloomberg survey. That would be the same-sized reduction as last month. The decision will be announced at 2 p.m. in Budapest, followed by a statement and likely briefing an hour later.
Prime Minister Viktor Orban’s government has been pressuring the central bank for a quicker reduction in interest rates, citing better-than-expected inflation data and anemic economic growth following a prolonged recession. But rate-setters, who had a brush with a currency crisis a year ago, prefer to play it safe.
“The current environment supports the continuation of rate cuts at an unchanged pace of 75 basis points in November,” Deputy Governor Barnabas Virag said told a conference last week in unusually explicit terms. If inflation continues to slow and global risk factors allow, the central bank intends to continue monetary loosening at this pace in the months ahead, he added.
The forint has gained 2.8% against the euro so far this quarter, with only the Russian ruble and Polish zloty outperforming it among a basket of 23 emerging-market currencies. The yield on the 10-year government forint bond fell to 6.9% on Monday, down from more than 9% at the start of the year.
The central bank has said its focus is to provide positive real interest rates to investors, where the benchmark rate exceeds headline inflation. The consumer price index fell to 9.9% in October, the first time it dropped below 10% in 18 months.
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