The main reason for Hungary Central Bank (NBH) to stop the rate cut cycle after one more cut is HUF depreciation that will likely feed through into higher prices. In addition, inflation climbed to 0.6% y/y in June and will likely rise further this year, and growth has proven to be quite resilient.
"In Hungary, the NBH might make one final 10bp cut to 1.4% and then call a halt to the rate cut cycle. It has many reasons to end the cutting cycle; however, we acknowledge that a further 10bp cut in August is also possible", forecasts Barclays.