Hungary’s National Bank Meeting: Will Rates Remain Unchanged or Another Cut Expected?

Analysts are divided on what to expect from Hungary’s National Bank (MNB) at today’s meeting. While the majority predict that the base rate will remain unchanged at 6.75%, a minority anticipate a 25bp rate cut. Most observers believe that the central bank will eventually cut rates by a total of 25-50bp before pausing the easing cycle. The futures market also reflects this uncertainty, pricing in around 30bp lower rates in the next 3-6 months.

Despite inflation data not being impressive and Q2 GDP disappointing, the global economic landscape has become more dovish, with major central banks like the Federal Reserve shifting their views. This has led to speculation that MNB may choose to implement any remaining rate cuts sooner rather than later to support the economy.

However, with the exchange rate stabilizing around 395.0 EUR/HUF, some analysts argue that MNB may hold off on further rate cuts to avoid adding pressure on the currency.

In conclusion, today’s outcome is a close call, but the prevailing sentiment leans towards no change in rates. The decision will have implications for investors and businesses in Hungary, as well as those with exposure to the country’s currency. Stay tuned for updates on the MNB’s decision and its impact on the financial markets.

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