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JPM Hold View for 100bps NBH Cut This Month After CPI

HUNGARY
  • Following today's CPI print, JP Morgan see food price dynamics as remaining very benign, and note the meaningful slowdown in core inflation. Momentum wise, they estimate that core printed sub 0.2%m/m in seasonally adjusted, or 2.3% in annualised terms, the lowest print since July 2021.
  • What they see now is even lower core goods prints, leaving only the Forint to stop the NBH from delivering another 100bps, with the fundamentals clearly giving the NBH room to cut interest rates from the highest level in the region.
  • Resultingly, they hold their call for another 100bp cut (to 8%) to be delivered this month, before the pace of easing is gradually reduced. Recent headlines and public exchanges about potential changes to the central bank law have probably not helped, and if volatility persists all the way to the meeting, they could see the NBH scaling back the pace to 75bps to play on the safe side. They forecast rates to 5.25% at the end of 2024.
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