Hungarian central bank likely to first hike rate in late 2018, HUF to be stronger in 2018-2019 – Nordea Bank

The Hungarian central bank is done lowering interest rates; however, more easing has come in the form of additional use of unconventional measures, particularly giving liquidity as long as possible to lower yields. The extent to which the MNB could ease the policy further is rather restricted given the tightening labor market and rising core inflation, indicating towards rising price pressures.  According to a Nordea Bank research report, the MNB is likely to first hike rates by the end of 2018; however, that is still highly uncertain.

“We keep our 3M EUR/HUF forecast at 305. However, we expect the HUF to be gradually stronger in 2018 and 2019, especially if we are right that the MNB will have to gradually hike rates,” added Nordea Bank.

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