National Bank of Hungary unlikely to change policy before ECB begins to tighten – KBC Market

The Hungarian central bank, yesterday, kept its base rate on hold at 0.9 percent, as expected. The NBH did not make any big changes in the statement either. According to the Council, the Hungarian economy is expanding around its potential level, whereas consumer price index might reach the target rate of 3 percent year-on-year in the mid-2019.

Also, the council maintained the monetary policy interest rate swap programs with a cap of HUF 600 billion till the end of second quarter 2018, and the new maximum stock amount would be announced in June for third quarter. The Council stated that it would “closely monitor developments in monetary conditions and will ensure the persistence of loose monetary conditions over a prolonged period by using the extended set of monetary policy instruments”.

“We expect that the NBH won’t change its monetary policy before the ECB starts to tighten. So it means that the current around 0 percent interest environment on the short end of the curve may remain with us at least till October”, stated KBC Market Research in a report.

In the short-term, the EUR/HUF pair is expected to trade in the range of 308 to 315, while there is a resistance level at the EUR/HUF 313 and support at the 310 level as well, added KBC Market Research.

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