All 16 economists polled between March 20 and 24 said the NBH would leave the European Union's highest benchmark rate on hold after a marginal decline in headline inflation to an annual 25.4% in February, by far the highest in central Europe.
Last month the NBH said it would tighten liquidity conditions, defying government pressure to cut borrowing costs amid a sharp economic slowdown. The NBH said all of its tools, including an 18% quick deposit rate would be needed to curb inflation.
Hungary's efforts at unlocking billions of euros worth of EU funding, another key condition for the NBH to boost confidence in local financial markets, are only expected to lead to funds flowing sometime in the second half of the year.
The forint has fallen some 3% versus the euro since last month's central bank meeting, rebounding from falls of around 6% in mid-March amid a global market rout following the collapse of startup-focused Silicon Valley Bank.
"We have recently revised our call for the central bank to start easing its extraordinary measures into 2Q23 rather than at the upcoming core meeting as we think that the volatile external financial conditions are yet to result in a 'trend improvement' of risk perceptions about the Hungarian economy," economists at Morgan Stanley said in a note.
"Moreover, inflation is also yet to show meaningful deceleration, despite the first signs in the February CPI data that a peak is forming."
The European Bank for Reconstruction and Development's chief economist told Reuters earlier this month that market bets on rate cuts in central Europe in the near future are optimistic as inflation could end up being stickier than expected.
Economists polled by Reuters project the NBH to start lowering interest rates sometime in the second quarter. However, they have pared back bets on the scope of cuts in the base rate to 175 bps by the end of the year from 250 bps seen last month.
"The quarterly inflation forecast review and alternative scenarios identified by the MPC may provide an opportunity to signal a dovish shift in the outlook and prepare grounds for gradual cuts in the o/n deposit rate in Q2 2023 if external market conditions stabilise," Citigroup's Eszter Gargyan said.
Likewise, analysts now see Czech rates falling to 6% by the end of the year, pencilling in just 100 bps of cuts compared with 125 bps a month ago.
(Reporting by Gergely Szakacs, Editing by William Maclean)
By Gergely Szakacs
