The huge risk of missing inflation targets is likely to trigger additional monetary easing, at first from the Hungarian central bank at tomorrow's meet (Tue, 22nd Mar). The MNB might tweak and/or deploy unconventional tools, but an explicit rate cut from the current 1.35% is not expected yet.

Annual headline inflation in Hungary was 0.3 percent in February, slowing from 0.9 percent in January mainly on lower fuel and food prices. The medium-term inflation target is 3 percent, with a one percentage point tolerance range on either side.

"The Monetary Council is ready to use all tools to meet its ... inflation target. Rate cuts could be back on the table this year, but the bank would first use more unconventional tools to loosen monetary conditions further," said deputy central bank governor Marton Nagy last week.