There is a small probability of 15bp reduction by NBH to 1.35%, but it will not have a very different market impact. Until last week, it was unclear whether NBH would cut the rate this month at all or not a disorderly Greek outcome would have put pressure on the HUF and the central bank would not have chosen to exacerbate that, but the risk-on market move underway now makes this a non-issue.



"NBH is expected to issue its final rate cut of this cycle probably a slightly smaller step-size of 10bp vs. the standard 15bp in recent quarters bringing the policy rate to 1.4%, where it is forecasted to remain through end-2016", says Commerzbank.



NBH has cut rates by a cumulative 50bp so far this year and a cumulative 550bps since 2012, but with core inflation stabilising over the past month, and forecast by NBH to accelerate to almost 3% in 2016, the MPC would not want to drive real interest rates even more negative.



"During Sept, the introduction of a new benchmark rate can be witnessed, a 3mth deposit rate, which will be set around the same 1.4% level as the present 2 week deposit rate. All these developments are more or less discounted, EUR-HUF is likely to hover around 315.00 over the coming quarter", added Commerzbank.