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Goldman Sachs and NatWest on February CPI

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  • Goldman Sachs forecast inflation to decline slightly to 25.4% y/y, driven primarily by lower transport fuel inflation. They will be paying close attention to whether there are further signs that food inflation is now moderating and whether the re-acceleration in core inflation in January reflected large one-off increases, or if the stronger momentum carries over into coming months as well. They continue to think that headline inflation is close to or at its peak and that it should decline through 2023.
  • At the same time, they remain concerned that underlying inflation will prove to be sticky, and even as the supply-side and largely external inflationary factors fade, the risk is that inflation will settle at a level that is well above the NBH’s inflation target.
  • NatWest expect the central bank to begin reducing its 18% effective policy rate from the March meeting and have turned neutral HUF, as they say any central bank that begins to unwind tight policy with inflation above 25% is likely to see its currency under significant depreciation pressure.
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  • Goldman Sachs forecast inflation to decline slightly to 25.4% y/y, driven primarily by lower transport fuel inflation. They will be paying close attention to whether there are further signs that food inflation is now moderating and whether the re-acceleration in core inflation in January reflected large one-off increases, or if the stronger momentum carries over into coming months as well. They continue to think that headline inflation is close to or at its peak and that it should decline through 2023.
  • At the same time, they remain concerned that underlying inflation will prove to be sticky, and even as the supply-side and largely external inflationary factors fade, the risk is that inflation will settle at a level that is well above the NBH’s inflation target.
  • NatWest expect the central bank to begin reducing its 18% effective policy rate from the March meeting and have turned neutral HUF, as they say any central bank that begins to unwind tight policy with inflation above 25% is likely to see its currency under significant depreciation pressure.