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 NBH unsurprisingly kept the headline policy rates unchanged, preferring to lean on alternate liquidity tools
- The required reserve ratio (RRR) was unexpectedly increased to 10% from 5%
- Policy statement tilted hawkish, stressing the need for higher rates for longer and the effectiveness of tenders to tie-up excess liquidity
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While the decision to keep the key rate constant at 13.0% was as expected, there had been some speculation among the sell-side that the O/N rate would be cut. Instead, the NBH kept all alternate policy rates unchanged and stressed the importance of these additional tools, adding that they will remain in place in the coming periods. Furthermore, in his post-meeting press conference, Deputy Governor Virag announced that RRR will be increased to 10% from 5% as of April 1. The use of RRR could ease pressure on the NBH to cut rates, as a greater share of liquidity is paid the base rate (13%) rather than the higher O/N rate (18%), providing P&L relief to the central bank.
The press statement also cited an improvement in investor sentiment and strengthened its expectations that inflation will turnaround in the coming months. This lent strength to the forint as investors seek the more generous HUF carry 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.