MNI NBH Review - January 2025: Slightly More Hawkish
Executive summary:
- The National Bank of Hungary kept its easing cycle on pause with a well-telegraphed ‘hold’ decision.
- Tweaks to the policy statement shifted in a slightly more hawkish direction.
- Guidance from the Deputy Governor continues to indicate that rates will likely be held for a prolonged period.
See the full review, with a summary of sell-side analyst views, here:
The tone of the policy statement was unsurprisingly hawkish given the upside surprise to inflation last month and the inter-meeting communication we had already heard from Virag. Last month, the central bank said geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation “warrant further pause in cutting interest rates,” but this month said those factors “warrant the maintenance of tight monetary conditions.” The tweak here is more hawkish at the margins given that the statement now lacks any reference to cutting rates.
Furthermore, the NBH highlighted that the December CPI surprised to the upside and that incoming data suggest an increased risk of a higher inflation path this year. This month’s statement also refers specifically to “risk aversion towards emerging markets” when mentioning inflation risks – an implicit nod to forint weakness, widely regarded as a significant component of the NBH’s reaction function.