National Bank of Hungary likely to keep policy rate on hold in July

The previous statements of National Bank of Hungary confirms that the central bank will stand pat this month too, noted KBC Market Research in a report. The previous statements also emphasized that the loose conditions might be altered in the next 12 months gradually if they see evidence for inflation stabilizing around the 3 percent year-on-year target.

It is also very likely that the National Bank of Hungary might follow the moves of ECB, which signifies that the central bank might switch to a less dovish stance in September. It is also significant when the country begins to receive the money from the EU funds, as the NBH increased the HUF liquidity on the market in May and June to help the issuance of Debt Management Agency.

“Once Hungary starts to receive the money, NBH may start to cut back the FX swaps tender as well”, added KBC Market Research.