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HUNGARY: ING, JP Morgan Expect NBH to Pause in October, Resume Cuts in December

HUNGARY
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  • ING conclude from this morning's data that several indicators signal that the underlying inflation picture is improving somewhat, although there is still work to be done from a monetary policy perspective. According to their latest forecast, headline inflation could return to around 4.5-5.0% by December and core inflation to above 5%.
  • On policy, ING do not expect a rate cut in October, although if the current positive momentum in services continues, this could theoretically pave the way for a further 25bp cut. The earliest would be in December if market sentiment improves and the forint strengthens again
  • JP Morgan note that although today’s print was better than expected in an underlying sense, the broader inflation picture does not allow for a dovish turn on a single print. Hence, they think the NBH should not be adventurous and instead should focus on reinforcing its credibility by staying on hold in October and November, and proceeding with 25bps cuts in December and at a quarterly pace thereafter, accelerating only if the data improves.
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  • ING conclude from this morning's data that several indicators signal that the underlying inflation picture is improving somewhat, although there is still work to be done from a monetary policy perspective. According to their latest forecast, headline inflation could return to around 4.5-5.0% by December and core inflation to above 5%.
  • On policy, ING do not expect a rate cut in October, although if the current positive momentum in services continues, this could theoretically pave the way for a further 25bp cut. The earliest would be in December if market sentiment improves and the forint strengthens again
  • JP Morgan note that although today’s print was better than expected in an underlying sense, the broader inflation picture does not allow for a dovish turn on a single print. Hence, they think the NBH should not be adventurous and instead should focus on reinforcing its credibility by staying on hold in October and November, and proceeding with 25bps cuts in December and at a quarterly pace thereafter, accelerating only if the data improves.