Hungary: NBH Monetary Council to keep all rates on hold today - TDS

In line with the unanimous consensus, analysts at TDS expect the NBH Monetary Council to keep all rates on hold today, i.e. the base rate will be held at 0.9% and the O/N deposit rate at -0.15%.

Key Quotes

“With CPI inflation falling to 1.9% Y/Y in February from 2.1% in January, the NBH is likely to stick to its view that inflation would level off around the 2% level in the first months of this year before gradually moving to the 3% target “sustainably” by the middle of 2019. The dovish bias in the statement is likely to remain with the Council committed to ensuring the persistence of loose monetary conditions over a prolonged period.”

“At today’s meeting the Council will decide on the amount of liquidity to be crowded out in Q2 – this was set at HUF 400-600bn band for Q1 2018 – and will “adjust the stock of central bank swap instruments accordingly”.”

“Furthermore, the maximum allotted amount of 5 and 10 year interest rate swap facilities for Q2 will be announced; it was set at HUF 300 bn in Q1. Also at today’s meeting revised forecasts for inflation and growth will be released ahead of the Inflation Report, which appears on Thursday.”