MNB ‘happy to continue to loosen policy’, says Nomura
Image by Jessica Fejos
With a rate-setting meeting of the Monetary Council of the National Bank of Hungary (MNB) ahead on Tuesday, also set to discuss its regular Inflation Report, financial services group Nomura is expecting no change to the base rate, according to an analysis sent to the Budapest Business Journal on Friday.
“We think rates will be the least interesting part of the meeting, with the focus on what the MNB will announce for the end-of-Q1 3M depo cap,” said London-based research analyst Peter Attard Montalto. “With the policy framework still focused on liquidity and the front end of the curve, the base rate is immaterial and is likely to be kept unchanged in our view at 0.90%, as the MNB continues to tinker with liquidity,” he continued.
More interesting, the analyst argued, is the three-month deposit (the so-called 3M depo) cap.
“We think the key decision will be where the end-of-Q1 3M depo cap is set,” Montalto observed. “Our long-standing expectation was it could be lowered further to HUF 750 billion, and looking at the evidence we think that will still be the case. We will also watch for other hints on liquidity intervention next year, including more HIRS and duration swaps to shift liquidity out on the curve, though that can only come at the end of Q1. Rhetoric from the deputy governor in speeches or media interventions after the meeting will remain crucial,” he added.
Montalto concluded that, with credit lending growth still needing to increase to hit its target, and with CPI inflation broadly as expected and showing no real signs of pass-through from such a tight labor market, “the MNB will be happy to continue to loosen policy.”
Hungary Gasoline Prices 3% Over Regional Avg
Hungary to Address Future of Cohesion Policy During EU Presi...
Cordia’s Marina City Project Begins
Budapest Airport Wins 'Best Airport in Eastern Europe' for 1...
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
