MNI NBH Review - December 2023: Ending the Year Steady

Executive summary:

• The NBH cut the base rate by 75bps to 10.75% in what was a well-telegraphed decision.
• In its policy statement, the NBH reiterated that it would maintain its cautious approach to further rate cuts.
• Progress in unlocking EU funds was acknowledged, while the upper bound of the central bank’s 2024 inflation forecast was shifted slightly higher.

See the full review, with a summary of sell-side analyst views, here:

MNINBHRevDec23.pdf

The NBH delivered a 75bp cut to the base rate following an identical move in the prior two meetings. Both the decision itself and the policy statement offered very few surprises with the central bank maintaining its cautious approach toward monetary policy given heightened external risks. Accompanying the cut were 75bps cuts to each side of the interest rate corridor, maintaining the +/-100bp channel around the base rate.

The December policy statement was little changed to the November edition, with the NBH striking familiar notes of caution, warning against “heightened geopolitical tensions.” While the decision was unanimous, Deputy Governor Virag said the Monetary Council considered different options compared to the October and November meetings, deciding between a 75bp or 100bp cut (with no 50bp option).