March 8 (Reuters) - Hungarian inflation slowed for the
first time since the middle of 2021 in February, although only
by a touch as the headline rate stayed above 25%, giving no
relief yet to a central bank maintaining a hawkish policy.
Hungary's central bank has resisted pressure to begin
lowering either its base interest rate of 13% -- which is the
highest in the European Union -- or its 18% one-day deposit
rate. It kept rates unchanged at the end of February, saying
they could stay high for a prolonged time.
While inflation eased last month, it remains stubbornly
high, sitting at 25.4% year-on-year in February, versus 25.7% in
January. Food and energy prices were again a major driver of
price rises.
"I think we have seen the peak in January, and in fact the
picture in February is a bit more favourable than anticipated,
as core inflation also moderated a little," ING economist Peter
Virovacz said.
"From here we will see a very slow decline in inflation."
"So this is good news for the central bank... but this will
not change their stance, I think: we expect a rate cut (in the
18% quick deposit rate) only in May or June at the earliest."
The high quick deposit rate has helped keep the forint
strong since its introduction last October. The forint hit a
more than 10-month high last week and is central Europe's
biggest gainer so far in 2023, boosted by easing energy prices
and hopes Budapest can unlock EU funds held in a rule-of-law
dispute.
Virovacz said the central bank would maintain a tight policy
as news about the EU funds does not look too rosy at the moment,
and the U.S. Federal Reserve and European Central Bank maintain
hiking cycles.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Hungarian inflation Food prices rising fast in Hungary ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jason Hovet in Prague and Krisztina Than in
Budapest
Editing by Christina Fincher)
