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Inflation: A ‘Public Enemy’

HUNGARY
  • Foreign Minister Peter Szijjarto and Gazprom CEO Alexey Millerwill sign Hungary's 15-year natural gas agreement in Budapest (BBG).
  • In an economic conference last week, NBH Governor Gyorgy Matolcsy called the soaring inflation a 'public enemy', which has been a global phenomena since the start of the year.
  • Policymakers decided to slow down the pace of the NBH tightening cycle by hiking the policy rate by 15bps last Tuesday to 1.65% following three consecutive '30bps hikes'.
  • Unless inflation starts to surprise positively in the coming months (rising well above 5%), we expect the NBH to continue to increase its policy rate by 15bps at each of the next three meetings, which would lift up the policy rate to 2.1% by year end.
  • Next economic data to watch will be average gross wages and PPI inflation coming out on Sep 29 and Sep 30, respectively.

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