Hungary, the country with the highest interest rate in the EU, cut interest rates in the second month.
The Hungarian Central Bank lowered the policy rate in the second month. The bank gave the message that the discounts will continue as the risks decrease.
The bank cut the overnight rate by 100 basis points from 17 percent to 16 percent. Economists participating in the Bloomberg survey were also in this direction.
Inflation in the country fell in the fourth month in May, but it is still above 20 percent. The Central Bank and the government predict that inflation will fall below 10 percent in December.
In the monetary policy text, it was stated that “a cautious and gradual approach in monetary policy in the current environment” is required and the expression “If the risks continue to decrease, interest rate cuts will continue.”
The Bank also revised its 2023 inflation expectation from 15-19.5 percent to 16.5-18.5 percent.
The Hungarian forint, one of the most volatile currencies on a global basis, has gained 7 percent against the euro since the beginning of the year.