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:
- In May, the NBH kept the base rate unchanged at 13% but cut the effective rate a further 100bps to 17% - as was largely expected among sell-side.
- Consensus now calls for further easing of the Bank’s monetary policy tools with another 100bp cut to the effective rate as the risk backdrop improves and disinflation dynamics continue.
- Recent HUF weakness is unlikely to deter the central bank from pausing its easing cycle.
- This meeting will coincide with the publication of updated macroeconomic projections.
See the full MNI Preview, with a summary of sell-side analyst views, here:
At its previous meeting, the NBH outlined that a sustained improvement in risk sentiment and ongoing external re-balancing allowed the central bank to take steps towards policy normalisation. In the post-decision press conference, both NBH Govenor Gyorgy Matolcsy and Deputy Governor Barnabas Virag highlighted that policy normalisation will be gradual and cautious, and that a tight policy stance will be sustained for a prolonged period.
Signs of improving risk sentiment is evident in recent inflation data. While still among the highest in the EU, inflation in Hungary has continued to ease from its January peak, recording a 21.5% y/y increase in May. Furthermore, trade balance data recorded its third consecutive surplus, recovering from a deep deficit in late-2022. This is significant as recent policy statements have explicitly stated that a “trend-like improvement in the current account” is needed as evidence of an improvement in Hungary’s fundamental risk profile.
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.