MNI NBH Preview - Jan'25: Steady Amid Rising Price Pressures
Executive summary:
- The National Bank of Hungary is expected keep its base rate unchanged at 6.50% following a further surge in inflation in December, with the decision likely to be accompanied by hawkish communication.
- Improving global risk sentiment and the associated recovery in HUF will be welcomed by policymakers, but domestic challenges mean no change to the base rate is expected until Q2-2025 at the earliest.
- Among sell-side, no analyst view we have surveyed expect to see any change to the base rate this month.
See the full preview, with a summary of sell-side analyst views, here:
Since the last meeting, the release of December inflation figures justifies a continued cautious approach to policy. The headline figure crossed at +4.6% Y/Y compared to
+3.7% in November, above expectations of a more moderate increase to +4.3%, driven in part by base effects and also by unexpectedly high food and energy prices. Month-on-month, prices rose +0.5%, unchanged compared to November.
Inter-meeting communication from Deputy Governor Virag suggests that this month’s decision will be accompanied by hawkish rhetoric. Virag said in a podcast with local news site 24.hu that Hungary needs to stabilise the forint to slow inflation, which is now expected to be closer to the 4.1% top-end of the central bank’s forecast range following a price spike in December. He described the data as a “warning sign,” adding that the central bank needs to maintain 6.50% key rate under current conditions.