MNI NBH Review - November 2024: Maintaing a Hawkish Tilt
Executive Summary:
- The National Bank of Hungary kept its base rate unchanged at 6.50%, in-line with unanimous consensus.
- Communication in the policy statement and press conference remained hawkish, but no more so than the October statement. Perhaps the most surprising element of the meeting came when Deputy Governor Virag revealed that one member of the Board voted for a cut.
- Among sell-side, views are mixed over when the next rate cut will be delivered.
See the full review, with a summary of sell-side analyst views, here:
The November policy statement was unsurprisingly hawkish given the rally in EUR/HUF over the past month combined with the NBH’s sensitivity to deteriorating risk sentiment. However, language was no more hawkish than in the October statement. “A careful and patient approach to monetary policy is still warranted,” the NBH repeated, continuing to cite geopolitical tensions and volatile financial market developments that warrant further pause in cutting interest rates. In addition to the on-hold decision, the NBH reiterated that "it stands ready to smooth movements in financial markets by using instruments with longer maturities in December in addition to one-day FX swap tenders announced on a daily basis and weekly discount bill auctions".
There was no new guidance in the press conference either, with Deputy Governor Virag noting that "If warranted by the external environment and the inflation outlook, the base rate may remain at the current level for an extended period.” The comments mirrored those provided by Deputy Governor Kandracs last month. Outside of this, there was little mention of FX weakness, and no talk of hikes at all. In fact, Virag revealed that one member of the Monetary Council voted for a rate cut which is surprising given that the MPC usually present their decisions with unanimity.