Standard Chartered has outlined conditional easing paths for both the Banco Central do Brasil (BCB) and the National Bank of Hungary (NBH), signaling that each central bank may lower interest rates further if specific economic conditions are met. The analyses come amid cooling inflation in both countries, yet with persistent risks that could delay or derail the rate cuts.
For Brazil, the BCB is currently holding its Selic rate at 13.75% since September 2022. Standard Chartered projects a first 25-basis-point cut in September 2024, provided that inflation continues to decelerate toward the official target, the Real stabilizes against the US dollar, and fiscal policy remains credible. The bank expects a gradual reduction to 11.50% by mid-2025. However, it warns that premature easing could weaken the currency, reignite inflation expectations, and force a policy reversal. External factors, such as a stronger US dollar or fiscal slippage, could keep rates elevated longer.
In Hungary, the NBH has already reduced its base rate to 6.5% after a series of cuts from a peak of 13%. The latest consumer price index reading came in below expectations, reinforcing the case for further easing. Standard Chartered sees room for the NBH to continue cutting, but cautions that aggressive moves could pressure the forint if global risk appetite sours. The forint’s recent stability and improved investor sentiment offer some buffer.
Both outlooks highlight the balancing act between supporting growth and maintaining price stability. Investors and market participants are advised to monitor central bank communications and inflation data closely, as any deviation from the projected disinflation paths could alter the timing and scale of the easing cycles.
