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HUNGARY: Jan CPI Leaves NBH With Little Room for Manoeuvre This Year, ING Say

HUNGARY
CEEMEAEM BulletBulletEmerging Market NewsHungary
  • Before the January inflation shock, ING note that their inflation forecast for this year (an average of 4.5%) was already among the highest in the market. The technical effect of the latest January data has now raised their forecast for average inflation in 2025 to above 5%. In terms of the expected range of fluctuation during the year, ING see the inflation rate moving between 4.5-6.0% Y/Y.
  • ING say all these developments also suggest that the NBH may have little room for manoeuvre to cut interest rates this year. Unless this year's economic performance is shockingly weak, which is becoming more likely in this inflationary environment, the central bank will probably have to keep the key interest rate unchanged at 6.50% throughout the year, they say.
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  • Before the January inflation shock, ING note that their inflation forecast for this year (an average of 4.5%) was already among the highest in the market. The technical effect of the latest January data has now raised their forecast for average inflation in 2025 to above 5%. In terms of the expected range of fluctuation during the year, ING see the inflation rate moving between 4.5-6.0% Y/Y.
  • ING say all these developments also suggest that the NBH may have little room for manoeuvre to cut interest rates this year. Unless this year's economic performance is shockingly weak, which is becoming more likely in this inflationary environment, the central bank will probably have to keep the key interest rate unchanged at 6.50% throughout the year, they say.