Hungary Cuts Policy Rate in Preparations for Euro Entry

The National Bank of Hungary has cut its policy rate by 25 basis points to 5.50%, according to ING's Chief Economist in Hungary, Peter Virovacz.

Virovacz sees a terminal rate of 4.75% for the country, although the bank provided little forward guidance yesterday.

The euro entry narrative is supporting Hungarian assets, with plans to re-orient the inflation target to 2.00% from its current 3.00% at some stage.

This is similar to what happened in South Africa last year when the Reserve Bank pushed for a lower inflation target of 3.00% from 4.50% prior.