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POLL-Hungary to leave rates unchanged next week, tightening bets evaporate

* Base rate seen at 0.6%, O/N depo rate at -0.05%

* Lower inflation, stronger forint ease pressure on central bank

* Bank may even reverse hike in one-week deposit rate by end-2020

* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=HUINT%3DECI poll data

BUDAPEST, Nov 11 (Reuters) - The National Bank of Hungary (NBH) is likely to leave key interest rates unchanged next Tuesday, a Reuters poll of economists showed, as a retreat in inflation and gains in the forint eased pressure on the bank to tighten policy further.

All 22 analysts in a Nov. 9-11 survey said the NBH would leave its base rate at 0.6%, while the 12 economists who gave a forecast for the overnight deposit rate also said it would remain at -0.05%.

The bank unexpectedly hiked the interest rate on its one-week deposit facility by 15 basis points to 0.75% in September amid a rise in domestic inflation and higher risk aversion due to the second wave of the coronavirus pandemic.

But local inflation slowed across the board in October and the forint firmed to two-month-highs amid a global market rally on news about progress towards a COVID-19 vaccine, giving the bank room to breathe.

Most economists do not expect the bank to change the interest rate on its one-week deposit facility, which allows it to manage liquidity in the banking system and influence short-term rates, until the end of the year.

However, some analysts say the bank may even reverse the September hike by the end of 2020 if market sentiment remains supportive in a symbolic move to support the economy, which is seen contracting by 6% this year. “We think that inflation at target, together with the Forint retracing to below 360 levels versus the Euro, alleviates pressures on the (NBH) to tighten short-term policy rates,” economists at Goldman Sachs said in a note.

“Over time, if the Forint stabilises or strengthens further and inflation continues to decline in the months ahead (as we expect), we think the (NBH) will eventually look to reverse its 15bp hike in the 1-week deposit rate.”

Prime Minister Viktor Orban’s government announced a partial lockdown from Wednesday to stem a rise in coronavirus infections after a spike in new cases since September that has pushed the number of deaths to record highs over the past week. (Reporting by Gergely Szakacs; Editing by Toby Chopra)

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