Economy
Hungarian c.banker says rate cuts are justified, but expectations gone too far
"The central bank cannot watch idle the euphoria which is taking shape (in Hungarian markets), and which is not fully underpinned by fundamentals," Bihar said in an interview.
The bank (NBH) has lowered its key policy rate by a combined 300 basis points in the past five months to 6.50%. On 23 November it cut 50 basis points for the fourth straight month, and Bihari voted for a 25-bp cut then."Any overshoot in (rate cut) expectations can backfire later. We (the central bank) need to stay sober, and we also need to communicate this sobriety outside," he said.
"This message can be conveyed in several ways," Bihari added. "The size of interest rate cuts can also send these important signals."
The next rate meeting of the bank is due on 21 December.
The bank (NBH) has lowered its key policy rate by a combined 300 basis points in the past five months to 6.50%. On 23 November it cut 50 basis points for the fourth straight month, and Bihari voted for a 25-bp cut then."Any overshoot in (rate cut) expectations can backfire later. We (the central bank) need to stay sober, and we also need to communicate this sobriety outside," he said.
"This message can be conveyed in several ways," Bihari added. "The size of interest rate cuts can also send these important signals."
The next rate meeting of the bank is due on 21 December.
