Hungary cenbank holds policy meeting, outcome as expected

Interest rates on hold

Today’s decision causes no surprise. Each analyst polled by Portfolio projected that after a 10bp raise to the O/N deposit facility rate in March, the MPC will do the same as in April, i.e. nothing.

The MNB communicated after its March policy meeting that it was switching into a data-drivne mode, relying heavily on the quarterly Report on Inflation. Real action (e.g. further rate hikes for instance) should thus be expected at policy meetings that coincide with the publication of said document. The next of such occasions will occur in June.

Analysts argue that inflation data, the external environment and changes in the forint exchange rate in the following months will determine whether the MNB will have to raise interest rates this year, how many times and by how much.

Whereas the MPC has not tightened monetary conditions today, we should keep a close eye on the wording and tone of the official statement to be released at 3 P.M. today. The focus should be on whether the rate-setters’ assessment of domestic inflationary developments and the external environment has changed or not, as these could provide additional guidance to future moves.

• Tags:
• MNB,
• cpi,
• economy,
• central bank,
• consumer price index,
• inflation,
• monetary policy,
• monetary council,
• mpc