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Hungary: MC to keep policy rates on hold - TDS

According to analysts at TD Securities, there is little doubt that the Hungary’s Monetary Council (MC) will keep all its policy rates on hold today.

Key Quotes

“Of greater interest is whether the MC will make any changes to their liquidity measures as part of their regular quarterly view and in light of the December Inflation Report, which they should have to hand. The NBH has already announced some steps in the process of policy normalisation. By the end of this year the NBH has said that they will phase out the 3m deposit facility, as well as ending mortgage bond purchases and IRS tenders.”

“The question is whether they announce any new steps. November CPI inflation fell to 3.1% Y/Y from a prior 3.8%, largely reflecting the fall in global oil prices. Core inflation remained unchanged at 2.6%. With headline inflation now back close to the 3% target we think that there is little pressure on the MC to take any more steps towards normalisation for the time being.”

“At most we might get the odd tweak to their liquidity measures and instruments. The amount of liquidity to be crowded out was set at HUF 400-600bn for Q4; for Q1 the MC will probably set the same.”

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