Rate Decision - MNB Remains Silent About Stance

The MNB has decided today to leave unchanged its main interest rates at its regular interest rate setting meeting. The decision is broadly in line with expectations and the indication of the central bank.

The MNB has not made clear its intensions about the future stance of monetary policy. Following two major shifts in its intentions about policy earlier this year (the hawkish shift by the deputy governor Mr. Nagy in mid-January, and the dovish turn by the governor, Mr. Matolcsy during the March press conference), markets lack a clear guidance regarding the MNB’s future actions.

The central bank adheres to a quarterly periodicity in taking major decisions – based on the quarterly periodicity of their inflation reports. They mentioned such thorough assessment of the inflation developments to be a condition for major decisions such as interest rate amendments.

Today’s press release highlighted the two opposite tendencies in the inflation developments: frothing domestic real economy pushing wages and hence prices up, while the cooling international economy serving as a brake on prices.

The communication stressed the cautious attitude, though.

We expect that the recent developments in the inflation basket (the already elevated core indicators and the rise in non-core components) stress the importance of inflation expectations, and hence, the topic of exchange rate pass through. The EURHUF close to its all-time highs may be uncomfortable to the central bank, and eventually lead to the MNB intervening perhaps verbally to limit the recent forint weakening trend.

 

 

 

 

Hai Thanh Le Phuong, CFA
Head of Research

CONCORDE SECURITIES LTD.

Alkotás Point
50 Alkotás street, H-1123 Budapest.
Phone: | Fax: | Mobil:
|
MEMBER OF THE CONCORDE GROUP

 

 

This message and its attachments contain confidential information, and their disclosure is restricted by law and the relevant regulations. If you are not the intended recipient, it may be forbidden and illegal to disclose, copy, distribute or use the information in this message. If you are not the intended recipient, please notify the sender immediately and delete this message and its attachments. If you are a client of Concorde Securities Ltd., the standpoints and suggestions described in the message should be interpreted in accordance with the relevant parts of the agreement in effect between us.