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NBH Could Surprise With A 60bps Hike

HUNGARY
  • The NBH could surprise the market by hiking its benchmark rate by up to 60bps today to curb inflationary pressure.
  • Sell-side consensus expects a 30bps hike; however, a 30bps hike is very likely priced in by the market, and therefore may not be enough to halt the recent HUF depreciation.
  • HUF weakness keeps supporting inflation expectations.
  • This morning, economic data showed that the economic activity decelerated more than expected in the third quarter, up 6.1% YoY (vs. 7.3% exp.), down from revised 17.8% the previous quarter.
  • Yesterday, NBH Governor commented that the country needs to urgently work on its twin deficits as the current scale of state debt in addition to the current account balance are unsustainable.

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