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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
HUNGARY
- This morning, economic data showed that manufacturing PMI plunged to 50.7 in January (vs. 59.5 exp.), down from revised 65.5 the previous month.
- Part of the plunge could be attributed to the aggressive tightening cycle run by the NBH to continue its combat against inflation.
- Historically, a sharp increase in ST rates tends to weigh on the economic activity; the chart below shows that the 2-year change in Hungary 3Y yield has strongly led the industrial production (proxy for economic activity) by 6 months in the past cycle.
- Therefore, the geopolitical conflict in Russia puts NBH (and other CEE) policymakers in a difficult position as it continues to weigh on CEE currencies and support inflation expectations.
- In order to anchor inflation expectations, it is important for CEE central banks to keep their currency strong.
- Hence, the NBH will have to maintain an aggressive stance in order to continue its fight against inflation (‘public enemy’) if HUF remains weak, running the risk of deteriorating the economic outlook.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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