Hungary: NBH likely to start to get normal - TDS

Analysts at TD Securities are expecting the Monetary Council (MC) of Hungary to commence policy "normalization" at the meeting on Tuesday, 26 March, i.e. the gradual unwinding of the loose monetary policy that the NBH has been running for a long time.

Key Quotes

“This has been flagged for some time by the NBH with, in particular, a move in core inflation ex indirect tax effects above the 3% target stated as being a potential trigger for the normalization process to begin. In February, core inflation excluding indirect taxes moved up to 3.2% Y/Y.”

“At next week's meeting the MC will have the March Inflation report to hand. While this could influence the pace of future tightening it is unlikely to stop the start of normalization.”

“The market has received strong guidance from the NBH that normalization is about to start - failure to deliver would undermine the central bank's credibility.”