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:
- NBH surprised the market with an aggressive 185bps hike, levitating the base rate to 7.75%, its highest level since August 2009.
- The hawkish decision was mostly due to the HUF weakness, which keeps supporting inflation expectations.
Link to full publication:
Yesterday, the NBH surprised the market with an aggressive 185bps hike, levitating the base rate to 7.75%, its highest level since August 2009. The hawkish decision was mostly due to the HUF weakness, which keeps supporting inflation expectations. The NBH will also readjust its 1W depo rate by 50bps on Thursday (June 30) and then proceed with monthly decisions on both the base rate and the 1W depo rate, unless the HUF keeps weakening in the near term. As a depreciating HUF keeps de-anchoring inflation expectations, further weakness in the forint will lead to more readjustment via the 1W depo rate.
The NBH mentioned in its statement that it needs longer monetary tightening cycle to continue its combat against inflation. As expected, the central bank reviewed its inflation forecasts higher to 11%-12.6% for 2022 (vs. 7.5%-9.5% previously) and to 6.8%-9.2% for 2023 (vs. 3.3%-5% previously). Deputy Governor Virag mentioned during the press conference that inflation should peak in fall this year and should stay in double-digit territory in H2.
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.