By Gergely Szakacs
BUDAPEST (Reuters) - The National Bank of Hungary (NBH) is expected to keep interest rates unchanged at least until the end of next year as inflation stays near its 3% target and economic growth looks set to slow from this year's highs, a Reuters poll of analysts showed.
All economists taking part in the Oct. 14-16 survey said the NBH would keep its base rate at 0.9% and its overnight deposit rate at minus 0.05% at its monthly policy meeting on Tuesday.
The bank left interest rates unchanged last month, with global monetary easing, a deteriorating euro zone economic outlook and lower inflation outweighing considerations about a sliding forint (EURHUF=D3).
The bank has also trimmed its inflation forecasts for this year and next and warned of downside risks to Hungary's growth outlook, reversing a previous modest tightening in liquidity conditions.
"The central bank remains in data-driven mode, but we think that further downside surprises in growth and inflation data can trigger further increases to the limits of the crowded-out liquidity target," Morgan Stanley (NYSE:MS) analyst Georgi Deyanov said.
"Uncertainties about the ECB's and Fed's monetary policy remain elevated. All in all, normalization seems to be have been moved to the back of the priority list, given the current external backdrop," Deyanov said.
Deputy Governor Marton Nagy said on Wednesday that low interest rates were here to stay, because global inflation rates were unlikely to return to their previous higher levels in the coming years.
The central bank targets 3% inflation with a tolerance range of a percentage point on either side. Tax-adjusted core inflation, its preferred measure of lasting price trends, rose to 3.4% in September from 3.2% in August.
Analysts polled by Reuters expect headline inflation to average around 3.3% a year through 2021. Economic growth is expected to slow to 3.25% next year from 4.6% in 2019.
The central bank has said any necessary adjustment of monetary conditions would be implemented through changes in the overnight deposit rate or tools designed to adjust market liquidity.
"We don't see any change in monetary policy in the foreseeable future," said economist Peter Virovacz at ING. "Regarding the risk assessment, we see the risks tilted to the downside, meaning we see higher probability for a dovish step than a hawkish one as a next move by the NBH."