BUDAPEST: Hungary's central bank (NBH) is expected to keep record-low interest rates on hold at its April 24 meeting and could keep the base rate unchanged at least until 2020, a Reuters poll of analysts showed on Thursday.
In the poll taken April 16-18, analysts said the bank could start to increase interest rates only after the European Central Bank tightens its own policy, or if inflation rises significantly.
All 17 analysts in the survey predicted that the 0.9 percent base rate would not change in April, while 16 analysts unanimously projected no change in the -0.15 percent overnight deposit rate either.
None of the participants expect a change in either rate this year, but some of them see a rise next year. The median forecasts show an unchanged base rate and a rise in the overnight rate to around 0.08 percent.
Deputy Governor Marton Nagy said on Wednesday that corporate lending could grow by an annual 10-15 percent and household lending even faster in the next few years.
He said in February that the bank could keep its base rate on hold until 2020.
Forward rate agreements price in some rise in short-term interest rates as soon as next year.
In the poll, the consensus forecasts showed that the three-month interbank BUBOR rate could stay unchanged at 3 basis points this year and rise to 7 basis points by the end of April 2019.
"Whatever happens (in central bank interest rates) will depend on the ECB and Hungary's inflation," said Sandor Jobbagy, analyst at CIB in Budapest.
"As long as the ECB does not move (interest rates higher), or it does not give a clear signal, the NBH will have room to not raise its rates, while in inflation no danger is on the horizon."
The poll projects a gradual rise in inflation from 2.55 percent in December this year to 3 percent by the end of 2020, which is the centre of the NBH's 2-4 percent target range.
The analysts projected 3.9 percent economic growth for this year and a slowdown to 3.2 percent in 2019.
A surge in wages is a key driver of growth across Central Europe.
Analysts do not expect rising consumption to significantly reduce Hungary's current account surplus, a key factor supporting the forint.
Their median forecast for the surplus was 3.7 billion euros for 2018 and 3.5 billion euros for 2019. They expected the country's trade surplus to narrow from 7.85 billion euros to 7.55 billion euros.
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