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GS on NBH Policy Outlook

HUNGARY
  • While the emergence of the Omicron Covid variant introduces downside risks to activity, GS analysts nevertheless think that the MNB will remain focused on high inflation and depreciation pressures on the Forint, and that it will therefore continue with its front-loaded tightening cycle.
  • GS continues to expect the base rate to reach a peak of +4.00% (1pp above our estimate of neutral rates in Hungary), and analysts also think that the MNB will maintain its 1-week depo rate above the base rate through 2022H1, with the extent of that spread determined by developments in the Forint.

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