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NatWest Revise NBH Call to 100bps Cuts at Upcoming Meetings

HUNGARY
  • Contrary to NatWest’s call, Hungary moved in line with market expectations, cutting the relevant policy rate 100bps to 17%. They had expected them to front-load as much as 300bps as a widening fiscal deficit, historically high debt repayment costs and dashed hopes of receiving early EU funding left authorities with few remaining options to relieve fiscal pressure.
  • They now revise their call to 100bps of rate cuts at each of the next 4 meetings, leaving interest rates at 13% by September. If the NBH continues to set policy with markets in mind, it should rule out volatile moves lower in HUF, NatWest say. However, NatWest remain bearish the currency, forecasting EURHUF at 410 by year-end.
  • They stick to their long PLN/HUF position: target 85; stop-loss 79.74; entry 81.05.
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