Hungary's MNB cuts inflation expectations and targets long-term yields

Hungary's central bank MNB kept its rates unchanged at 1.35% in its December MPC meeting, indicating that the rates will be on hold for an extended period, the MPC gave guidance to focus on more unorthodox monetary policies to hold long term bonds yields down.

In its Q4 Inflation Report, the CB revised growth and inflation forecasts further down, reflecting regional trends. 

It now estimates 2015 inflation to have been zero on average, forecasts 2016 at 1.7% (down from 1.9% in its Q3 report) and 2017 at 2.6%; these forecasts are closer to our own forecasts of 0.2% for 2015, 1.4% for 2016 and 2.7% for 2017.