William Jackson, a senior emerging markets economist at Capital Economics said Hungary's surprise move on Tuesday probably marks the start of a modest easing cycle.
"As things stand, we expect a further 20 basis points or so of cuts in the coming months, bringing the policy rate to 1.0 percent by year-end," he said in a note.
"Today's decision was probably triggered by a few factors including additional policy stimulus by the ECB, likely downwards revisions to the National Bank's inflation forecasts (due to be released in this month's inflation report), and the weaker-than-expected activity and inflation data released over the past month."
The economy in Hungary is likely to slow a little and inflation could edge lower in the next few months, according to Jackson.
—CNBC's Kalyeena Makortoff contributed to this article.