MNB’s macro view changes little, CIB Bank says


The macroeconomic view of the Monetary Council of the National Bank of Hungary (MNB) has changed little, according to a CIB Bank Hungary flash sent to the Budapest Business Journal Tuesday after the rate-setting meeting of the council, which left the central bank’s key rate intact.

The council left the central bank’s main policy rate unchanged at 0.9% at its meeting yesterday, the decision matching the market consensus, while leaving O/N rates unchanged, including the depo (already in negative territory at -0.05%). The council also made a decision on a further quantitative restriction of the 3M depo facility, setting the limit at HUF 750 billion for the end of the first quarter of next year.

The official statement issued by the central bank Tuesday adds that the latter decision, consistent with the gradual steps taken so far, will mean the crowding out of at least HUF 100-200 bln additional liquidity from the deposit facility, the CIB flash notes.

“The MC aims to ensure that the limit imposed on the stock of three-month deposits exerts its expected easing effect efficiently. The limit is set quarterly. On the next occasion, a decision on its level at the end of the second quarter of 2017 will be made in March 2017,” the flash notes.

As far as the current macroeconomic view of the Hungarian central bank is concerned, “some degree of unused capacity has remained in the Hungarian economy, but looking ahead, the disinflationary impact of the domestic real economic environment is gradually dissipating,” the CIB flash notes. 

“Inflation rises over the forecast period and reaches the inflation target in the first half of 2018. Looking ahead, whole-economy wage growth is likely to rise further, as a result of continued strong demand for labor and the latest wage agreement,” CIB Bank says. In turn, this is expected to raise the core inflation of Hungary through an increase in household consumption, according to the flash.

“However, with persistently low global inflation and historically low inflation expectations, the consumer price index is expected to rise only gradually. In the current projection, inflation reaches the 3% level consistent with price stability in the first half of 2018,” CIB Bank adds.

Keeping its view unchanged, the council apparently also claims that “if the assumptions underlying the bank’s projections hold, maintaining the current level of the base rate for an extended period and the loosening of monetary conditions by the change in monetary policy instruments are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy,” according to the flash sent by CIB.

“In the council’s assessment, a watchful approach to monetary policy is still warranted due to uncertainty in the global financial environment. If subsequently warranted by the achievement of the inflation target, the council will stand ready to ease monetary conditions further using unconventional, targeted instruments,” the CIB analysis concludes.

Hungary Gasoline Prices 3% Over Regional Avg Energy Trade

Hungary Gasoline Prices 3% Over Regional Avg

Hungary to Address Future of Cohesion Policy During EU Presi... EU

Hungary to Address Future of Cohesion Policy During EU Presi...

120,000 Guest Workers Employed in Hungary HR

120,000 Guest Workers Employed in Hungary

Budapest Airport Wins 'Best Airport in Eastern Europe' for 1... Awards

Budapest Airport Wins 'Best Airport in Eastern Europe' for 1...


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.