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Deutsche Bank sees Hungary rate cut in early Q2

BUDAPEST: Deutsche Bank expects the National Bank of Hungary (NBH) to cut its key interest rates at the beginning of the second quarter of the year.

"Despite the size of recent rate cuts, there is still some room for further rate reductions," London-based Deutsche Bank analyst Natalia Gurushina said in the bank's weekly report on emerging markets.

The reduction should follow an already announced cut in the forint's monthly devaluator to 0.3 percent from 0.4 percent on April 1, she said.

The NBH cut its two-week deposit rate three times between December 17 and January 19 by a total of 225 basis points to 12.25 percent.

Gurushina said a trend of rapid disinflation would continue in the first quarter of 2000 after a fall in year-on-year consumer price inflation to 10.0 percent in January from 11.2 percent in December. Howerver, she said Deutsche still believes average annual inflation this year will overshoot the official 6.8 percent target by about 1.5 percentage points.-Reuters