Hungary: NBH to keep all its policy rates on hold today - TDS

Analysts at TDS expect the Monetary Council of the NBH to keep all its policy rates on hold today, i.e. the policy rate will be held at 0.9% and the O/N Deposit rate will be held at -0.15%, in line with the unanimous consensus.

Key Quotes

“We have, for a long time, been critical of the NBH's dovish policy, which is looking increasingly out of joint with what is going on in other EM countries. Czech, Romanian and Asian EM CBs are tightening. Furthermore, May CPI inflation has accelerated to 2.8% Y/Y moving close to the 3.0% target. Since start of the year HUF has weakened 4.0% against the EUR and 1.6% since the May MC meeting.”

“In our view the MC should give clear signs to the market that they are now going to start rolling back on some of the easing measures. The key information today is whether MC will maintain the current scale of the monetary easing measures and the dovish rhetoric.”

“We suspect that they might stick to their guns and leave everything more or less unchanged, in which case we expect EURHUF to continue to move higher. If the NBH reduces the size of any of the easing measures and starts rollbacking on the dovish rhetoric, then we would expect EURHUF to move lower.”