MNI NBH POLICY: NBH To Hold Rates As Inflation In Line
MNI (LONDON) - The National Bank of Hungary is likely to leave its base rate unchanged 6.50% when it meets this week, MNI understands, having previously made clear that it will maintain rates at their current level for as long as needed. (See MNI EM POLICY: NBH Cautious Despite Lower Near-Term Inflation)
Conditions have not changed markedly since November, with inflation increasing in line with previously communicated central bank expectations. The forint has seen some depreciation since the November meeting, but has since recovered most of that ground.
The decision by Moody's Ratings late in November to downgrade Hungary to outlook negative was a surprise to officials, but was offset by the positive surprise delivered by Fitch this month.
Overall, the statement and the guidance issued in November ring true today. Inflation is moving in accordance with NBH projections - absent any shocks - but a “careful and patient approach to monetary policy" is still warranted.
One Monetary Policy Committee member - Mihaly Patai - voted to cut rates last month and may do so again. Patai’s current mandate expires in March, when Finance Minister Mihaly Varga is set to take over as governor from Gyorgy Matolcsy.
Varga will speak at a parliamentary hearing on Monday.