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Reuters poll sees MNB tightening strengthening forint

The forint is expected to firm slightly in the next 12 months as Hungary’s central bank could start to tighten its monetary policy gradually, analysts said in a Reuters poll conducted February 1-5.

The survey projected a 0.5% gain for the forint in the coming year relative to midday trade. An updated median forecast of 316 versus the euro is stronger than the 320 projected for the 12-month horizon in a survey a month ago.

Last month the forint reached its strongest level since May, at 315.03. It strengthened after Márton Nagy, deputy governor of the National Bank of Hungary (MNB), said three weeks ago that the bank could start to tighten policy if tax-adjusted core inflation reaches or exceeds 3%.

The bank has kept its main rate at a record low of 0.9% since 2016 and is not expected to increase it this year. But many market participants said it could let short-term interbank interest rates rise soon, supporting the forint, given that the inflation gauge reached 2.9% in December, the Reuters poll reported.