Hungary's National Bank (MNB) will announce its Monetary Policy Decision today. Economists at Commerzbank analyze Forint’s outlook ahead of the meeting.
MNB is set to continue lowering its interest rate corridor at this month’s MPC meeting. It has become usual over the past few meetings for the central bank to lower its emergency rate corridor by 100 bps – the same is expected today. But, this meeting assumes additional significance because the one-day depo rate will drop (from 14% to 13%) to the same level as the base rate. The MPC may repeat that it will maintain a cautious approach until inflation has moderated decisively.
We expect the Forint to underperform CE3 peers in the coming months, but the degree of reaction to rate cuts will depend on how clearly and unambiguously inflation moderates during this timeframe. Of course, the weakness of the real economy in Germany and the CEE can become a supportive factor for lower interest rates, but we doubt that this justifies a stronger Forint.
What is more, at his parliament address on Monday, PM Viktor Orban raised the stakes by announcing that ‘the government had taken over the task and responsibility of fighting inflation, … This is a novelty as usually it is central banks and not governments which have inflation targets’ – such remarks will only serve to boost policy uncertainty and are surely negative for the exchange rate.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.