Hungary cautious over rate cuts

The National Bank of Hungary’s (NBH) quarterly inflation report due for publication on August 25 is likely to show a downward shift in the NBH’s headline CPI projection from the fourth quarter 2009 and onwards. We believe CPI inflation might be approaching the NBH’s 3% target within the 5–8 quarter forward-looking target horizon, while in the near term inflation is likely to shift higher due to the rapid pass-through of energy prices (the NBH’s inflation forecast assumes a constant exchange rate

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