* Base rate stays at 0.9 pct, in line with expectations
* Forint unchanged after decision
* Bank could ease again if inflation fails to rise -analyst
* Further deposit squeeze could come next month -poll
By Gergely Szakacs
BUDAPEST, May 23 Hungary's central bank kept
interest rates unchanged as expected on Tuesday, with a jump in
economic growth considered unlikely to lift inflation beyond the
bank's 3 percent target level in the foreseeable future.
All 20 participants in a May 15-17 Reuters poll forecast the
bank would not change its record-low 0.9 percent base rate.
At 1204 GMT, the forint traded at 308.50 versus
the euro, unchanged from its levels before the announcement.
Central banks in the European Union's eastern wing have kept
monetary policy loose for years, with only Czech rate setters
signalling a possible change of stance as inflation has risen
close to target levels in much of the region since mid-2016.
Hungary's central bank (NBH), led by Gyorgy Matolcsy - a
strong ally of Prime Minister Viktor Orban - has said it will
keep interest rates at current lows for a sustained period and
loosen monetary conditions further, if necessary.
Analysts said the Hungarian central bank, the most dovish in
the region, would not shift to tighter policy or rhetoric any
time soon and could squeeze more money out of its three-month
"Whether the central bank announces new measures every month
or not, the broad message is clear: NBH remains in ultra-dovish
mode, still incrementing the degree of monetary accommodation,"
analysts at Commerzbank said in a note.
"If core inflation in Hungary and around the euro zone were
to stay below target levels for another quarter, and show no
further tendency to accelerate, we think that the NBH will look
for fresh unconventional easing tools."
Hungary's annual headline inflation was 2.2 percent in
April, slowing from 2.7 percent in March. First-quarter economic
growth jumped to an annual 4.1 percent from 1.6 percent in the
With the bank ruling out further cuts in its main policy
rate, reducing the stock of its three-month deposits and
currency swap deals have emerged as key tools to curb market
interest rates and so make bank loans cheaper for Hungarians.
($1 = 274.28 forints)
(Reporting by Gergely Szakacs; editing by John Stonestreet)