BUDAPEST: Hungary will keep interest rates on hold next week and for several months to come as vital aid from international lenders is expected to be delayed into the second half of the year, a Reuters poll of analysts showed on Thursday.
In the monthly poll, 24 analysts forecast unanimously that the bank will keep its 7 percent base rate unchanged at its meeting next Tuesday for the fourth month in a row.
Prime Minister Viktor Orban will meet European Commission President Jose Manuel Barroso in Brussels the same day, but analysts expect no breakthrough towards the financial support that Hungary needs from the European Union and the International Monetary Fund.
Government amendments this week to the central bank law have not resolved all of Budapest's differences with Brussels. Aid talks have been put on ice for months as Hungary's lenders want the dispute over the central bank law and other legislation on data protection and the retirement age of judges resolved first.
Hopes for a deal have helped Hungarian markets recover from sharp falls early this year after the country's debt the biggest in Central Europe relative to economic output was downgraded to 'junk' status by rating agencies.
The prospect of aid has also helped the bank keep rates on hold after two 50 basis point hikes late last year.
But it has been unable to loosen monetary policy because inflation remains high and Hungary's debt and unpredictable economic policies have kept the forint vulnerable.
The central bank, which has urged the government to rein in the budget deficit, expects inflation to average out at 5-6 percent this year before falling towards its target level of 3 percent by early next year.
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