The National Bank of Hungary (NBH) will likely keep key rates unchanged next week, according to a Reuters poll. However, as the coronavirus continues to ravage the European markets, some analysts are anticipating the bank will introduce small rate cuts as well as quantitative easing to help contain the economic fallout. Of the 15 economists polled between March 16-19, 13 predicted that the central bank will keep its base rate steady at 0.9 percent, while one economist is bracing for a 10-basis-point reduction, and another says the rate could be slashed as much as 15 basis points. The overnight deposit rate is also expected to remain steady at -0.05 percent, according to 12 of the analysts polled by Reuters. The growth forecast for this year, meanwhile, fell to 0.9 percent from 3.5 percent in a February poll following several factories shutdowns across Hungary.
“Our assumption is that the quarantine measures will remain in place well into Q2 and the disruption is likely to hit activity, both domestically and in the euro-zone, harder than in the worst-affected quarter during the financial crisis,” Liam Peach of Capital Economics told Reuters. “For now, we expect a rebound in the second half of the year. But the hit to the region will intensify if the disruption continues into the summer.” Peach added that he expects the economies in Hungary and the Czech Republic will fall by 8 percent q-o-q in Q2 and by 10 percent in Poland.
