Economy
Reuters poll - Analysts see unchanged rates, higher inflation, budget uncertainties
Base rate to remain on hold.
All of the 16 participants of the poll, conducted between May 15 and 17, said the central bank would keep its 6.0% base rate, the highest in the European Union, on hold again on Monday. The bank's Monetary Council left the base rate unchanged at its last seven monthly rate-setting meetings following 19 months of cuts, and at the last six meeting its votes were unanimous.
NBH interest rates can stay on hold for as long as until 2008 as rate cuts projected earlier have been gradually phased out from the median forecasts of analysts in the past months.
Ten of the analysts said the base rate would be unchanged in the rest of 2006, one projected cuts totalling one percentage points, while five analysts forecast rate hikes.
The consensus sees unchanged rates in 2007 either, despite a rise in inflation forecasts and recent forint jitters.
The median forecast for average inflation in 2007 rose by 20 basis points from last month to 3.5%. It is now half percentage point above both the level projected two months ago and the NBH's 3% medium-term inflation target.
Annual inflation figures published in the past months were slightly above analyst forecasts as the impact of early-year value-added tax cuts was smaller than expected, and the forint has weakened by over 5% this year.
