MNB entering the second phase of the easing cycle

The Hungarian central bank (MNB) delivered another 100bp interest rate cut (to 13.00%) and simplified its monetary policy toolkit at today’s meeting, paving the way for the second phase of the easing cycle in the coming months. The hawkish tone of the communications support our view that this next phase will begin with a pause in the cycle at the meeting in October. But with inflation likely to keep falling sharply we maintain our view for 500bp of interest rate cuts by Q1 next year.