​EURHUF Dips on Effective Rate Decision

EURHUF has dipped moderately on the decision to cut the effective rate by 100bps – which marked the completion of the first stage monetary policy simplification. From now, the base rate will be used as the effective rate, rather than the one-day deposit rate.

• The cut as well as the measures announced by the NBH to simplify its monetary policy toolkit were largely as expected, though the NBH stressed that monetary policy must remain “tight”, while Deputy Governor Virag has said in his post-decision presser that the NBH will no longer be on “auto-pilot” with regard to rate cuts - potentially suggesting that the pace of rate cuts will be reduced from 100bps moving forward.
• The forint had already been the top performer in the EMEA FX space, with gains against both the euro and dollar exacerbated following the decision - USDHUF and EURHUF are both trading around 0.60% lower at typing. Support in EURHUF is found at 383.69 – the 50-day EMA.