Longer-term risks still point toward monetary tightening rather than easing in Hungary as eurozone periphery and CPI worries persist, London-based emerging markets analysts said on Thursday.
In its daily EEMEA Fixed Income Strategy & Economics report released to investors in London, Bank of America-Merrill Lynch Global Research said that the new inflation report by the MNB, published the previous day, did not contain any surprises relative to the statement after the MPC meeting on Monday.
"It is also in line with our own expectations, at least when it comes to the domestic macro dynamics ... However, we expect continued problems in the EU periphery to increase the pressure for a further few rate hikes next year."
In a separate report on Hungary's policy rates outlook, Morgan Stanley said that the most likely outcome of the inflation report is that "a prolonged period of rate stability lies ahead of us".
That said, "we continue to believe that the bar for a rate cut continues to be high: the tensions at the Euro area periphery need to subside, fears of contagion to CEE need to abate, fiscal consolidation has to continue and the MNB's benign view of inflation has to materialize".
While the MNB was proactive in raising rates in late 2010, "we disagree with the view that this implies it can take rates lower in the coming months".
Morgan Stanley's London-based analysts said they still see risks tilted towards rate increases, mostly because they are "less constructive" on disinflation than the central bank. They said their rate forecasts are 6% by end-2011 and 6.5% by end-2012.