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NBH Likely To Hike 1W Depo Rate by 30bps as EURHUF Breaks Above 380

HUNGARY
  • Selling pressure on HUF has been extremely elevated, with EURHUF surging by over 15 figures in the past week, breaking above the 380 level.
  • As HUF weakness keeps supporting inflation expectations, the NBH may intervene via the 1W depo rate facility and is likely to increase it in tomorrow’s meeting to ease the selling pressure on the forint (i.e. 30bps hike)
  • Yesterday, NBH Virag mentioned that Russia/Ukraine conflict may prolong monetary tightening and that rate hike is currently the ‘most important tool’ to defend HUF.
  • Virag reiterated that inflation remains the central bank’s main ‘enemy’
  • This morning, economic data showed that Q4 GDP final print came in slightly lower than expected at 7.1% (vs. 7.2% exp.).

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