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 National Bank of Hungary (NBH) is likely to slow down the pace of its policy tightening and hike its ‘core’ policy rate by 50bps on May 31, which would levitate the benchmark rate to 5.9%.
- The central bank is also likely to proceed with a 30bps in the 1W depo rate after pausing at 6.45% in the past month.
- As inflation remains partly driven by external factors outside of the monetary policy realm, Hungarian policymakers have been trying to stick with monthly intervention on the 1W depo facility as hiking too aggressively is not likely to have any ST impact on HUF and would also accelerate the economic slowdown.
Link to full preview:
The National Bank of Hungary (NBH) is likely to slow down the pace of its policy tightening and hike its ‘core’ policy rate by 50bps on May 31, which would levitate the benchmark rate to 5.9% (highest since November 2012). The central bank is also likely to proceed with a 30bps in the 1W depo rate after pausing at 6.45% in the past month.
Even though inflationary pressures remain elevated in the CEE region and the political uncertainty combined with the renewed geopolitical tensions have been constantly weighing on HUF, NBH policymakers have been signalling a potential slowdown of base rate hikes recently, with Deputy Governor Virag recently specifying that the central bank needs to slow the tightening stance on the base rate to about 50bps (from 100bps hikes in the previous two meetings). Virag added that the NBH does not need double-digit base rate even though the headline inflation is expected to exceed 10% in the months ahead.
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.