Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- The NBH is likely to maintain the pace of its tightening cycle and hike its policy rate by 100bps on August 30, which would levitate the benchmark rate to 11.75%, the highest level since April 2004.
- We have seen that the HUF has been extremely sensitive to the level of risk aversion, therefore forcing NBH policymakers to extend their monetary tightening as a depreciating currency keeps supporting inflation expectations.
- In addition, the NBH is also likely to readjust its 1W depo rate by 100bps on Thursday.
Link to full preview:
The National Bank of Hungary (NBH) is likely to maintain the pace of its tightening cycle and hike its policy rate by 100bps on August 30, which would levitate the benchmark rate to 11.75%, the highest level since April 2004. We have seen that the HUF has been extremely sensitive to the level of risk aversion, therefore forcing NBH policymakers to extend their monetary tightening as a depreciating currency keeps supporting inflation expectations. In addition, the NBH is also likely to readjust its 1W depo rate by 100bps on Thursday.
Inflationary pressures continued to rise in Hungary, with CPI accelerating to 13.7% in July (vs. 13% exp.), a 25-year high, up from 11.7% the previous month, diverging significantly from the NBH 4-percent upper tolerance band (figure 1, left frame). Inflation continues to be driven by higher food and consumer durable prices, and the current prints would be even higher (by a few ppts) if the government did not roll back prices for a number of staples.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.