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NBH Accelerated The Pace of The Tightening Cycle (As Expected)

HUNGARY
  • Yesterday, the NBH decided to raise its core policy rate by 100bps to 4.4%, its highest level since February 2013.
  • The acceleration in the tightening pace was broadly expected following the recent adjustments via the 1W depo rate facility.
  • As a reminder, the NBH has increased its 1W depo rate by 125bps since the start of the month to ease the selling pressure on HUF following the drastic depreciation in the forint in the end of February/ beginning of March.
  • The HUF partly recovered from its losses due to the Russia/Ukraine conflict, but still trade below its ‘fundamental’ value.
  • EURHUF retraced lower following the decision and found support at the 370 level before consolidating higher.
  • A break below that level would open the door for a move down to 364.80 (100DM).
  • The NBH mentioned in its statement that it needs longer monetary tightening cycle to continue its combat against inflation.
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