MNI NBH Review - September 2024: Incrementally Dovish
Executive summary:
- The National Bank of Hungary cut its base rate by 25bps to 6.50%, in-line with unanimous consensus.
- The policy statement offered few surprises, while Deputy Governor Virag’s press conference was interpreted as dovish given that he signalled rate cuts would be considered at each meeting through year-end.
- Among sell-side, the broad consensus is still that the central bank will deliver one additional 25bp cut in 2024, most likely in December when an updated economic forecast will be provided.
See our full review, with a summary of sell-side analyst views, here:
The decision to lower the base rate to 6.50% came as September projections showed headline inflation averaging 3.5-3.9% this year, 2.7-3.6% in 2025 and 2.5-3.5% in 2026. This year’s range narrowed from the 3.0–4.5% seen in June, while in 2025 the range increased slightly, and 2026 was unchanged. The Bank noted that CPI is expected to fall further in September and rise slightly above 4% by the end of 2024, with core inflation also seen rising in the coming months.
The policy statement continued to stress the need for "restrictive monetary policy", but no longer included the mention of there being "scope for lowering the interest rate further." Guidance in Deputy Governor Virag’s press conference was more dovish, as he stated that rate cuts would be considered in each of the remaining meetings of the year.