Emerging markets economists at JP Morgan said after the announcement that the monetary policy council’s statement was neutral with “no reference at all” to the rate outlook.
The neutral tone reinforces the view that policy rates are likely to remain on hold in coming months.
However, “we remain of the view that there is a greater chance that the next move in the policy rate will be a hike than a cut … we have penciled in a 25bp rate hike for the fourth quarter”.
“Our view on inflation is less benign than the central bank’s … we expect inflation to remain above the 3% target in 2012”.
In particular, “we do not think that the forint is currently strong enough to fully offset upside risks from commodity prices which have started to feed through into processed food and core inflation”, JP Morgan’s London-based analysts said.
Several other City-based analysts share this view.
Morgan Stanley said after the April CPI numbers were released last week that it thinks the MNB projection for disinflation in the coming quarters is correct in terms of direction, but it is “too ambitious” in terms of scope for inflation to fall.
“We forecast inflation to average at 4.6% this year and 3.9% in 2012 … we estimate that already in 2Q inflation is tracking about 0.4pp above the MNB projection”.
Morgan Stanley said it continues to believe that the next move in rates is more likely to be up than down.
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