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In recent years the most important central banks have been striving to offer predictability. Their major task has been to guide expectations. The Hungarian National Bank is trying to re-establish exactly this tradition after a near-silent transition phase following the changes in its leadership this spring.
Successfully riding a supportive external environment, since August 2012 it has managed to cut its base rate from 7 per cent to 3.60 per cent, an all time low, after a 20 basis point cut on Tuesday. But every good story must come to an end, and this easing cycle will end soon.
The MNB’s recent media communiques and the size of Tuesday’s cut – an unconventional 20 bp – show that the bank is well aware of that. Still, its desperate wish to achieve the lowest possible base rate is obvious.
Market players have questioned whether the bank has put aside its primary goal of achieving price stability. This is a charge firmly denied by MNB officials."
'via Blog this'
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