MNB economist and director Barnabas Virag recently stated that there is still space for further monetary easing in Hungary. With the preparation of estimates for the Q4 Inflation Report, the inflation developments have undershot the central banks expectations. It means that, if MNB reassess its inflation forecasts based on latest data and movement in the oil price; then the probability of actual downward revisions to be made in the Q1 Inflation Report rises, which will increase the chances of a rate cut.

Barnabas Virag also said that MNB may implement QE measures, but he was uncertain as compared to his colleagues in previous weeks, which may trigger a fresh debate on policy rate cut.

"We have a forecast of the Hungarian base rate being cut from 1.35% to 1% this H1 - these latest remarks are supportive of our call" - Commerzbank