MNI NBH Review - December 2024: Unsurprisingly Hawkish
Executive Summary:
- The National Bank of Hungary kept its easing cycle on pause with a well-telegraphed ‘hold’ decision.
- Guidance from the Deputy Governor continues to indicate that a prolonged pause in the easing cycle will be considered.
- Virag also revealed that there was another dissenting view in the dovish direction this month.
See the full review, with a summary of sell-side analyst views, here:
The new economic forecasts may be perceived as more hawkish at the margins – the NBH sees CPI falling to target in 2026 now compared to 2025 previously, while the statement notes that the “temporary” rise in inflation is not expected to reverse until after January. Overall, this will bolster broad expectations that rate cuts will resume no sooner than when the NBH is under new management in March.
There was no new guidance in the press conference either, with Deputy Governor Virag reiterating that the base rate may remain at the current level for an extended period. Such guidance has been offered previously, but a moderation in language here would have allowed the central bank to start gearing towards a resumption of rate cuts should they have wanted to, and the continued emphasis on a “sustained” hold has therefore been interpreted as hawkish.