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Momentum on HUF Remains Firm As Market Keeps Digesting Last Week’s Hike

HUNGARY
  • This morning, economic data showed that unemployment rate fell more than expected in November to 3.7% (vs. 3.8% exp.), down from 3.9% the previous month.
  • Yesterday, average gross wages decelerated to 8.5% YoY in October (vs. 9.3% exp.), down from 9.1% the previous month.
  • Momentum on the HUF has been firmed in recent days as market keeps digesting last week’s hike in the 1W depo rate (20bps hike to 4%).
  • The 1W depo rate could be raised up to 4.5% in early 2022 as the HUF weakness could prolong the NBH tightening cycle, ‘pressuring’ policymakers to increase the terminal rate.
  • Today, NBH will publish the minutes of its December meeting (1pm London time).

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