Hungary's central bank cut its policy rate 25bps to 5.75% on Tuesday, its second
consecutive monthly reduction and in line with economists' expectations. The
move follows a 25bps cut in June after forint appreciation led the bank to
sharply lower its inflation forecast and shift policy toward easing. Governor
Varga said there is room to deliver two further 25bps cuts over the summer, with
a reassessment of economic conditions in September. Analysts, including Capital
Economics EM economist Liam Peach, say current conditions continue to support
additional easing despite some post-election forint retracement.
