Hungarian Forint: MNB tone shift watched – Commerzbank
Commerzbank’s Tatha Ghose expects Hungary's central bank, Magyar Nemzeti Bank (MNB), to cut its base rate by 25bp to 5.50%, but stresses that guidance will matter more for the Forint. While headline inflation has surprised on the downside, core and services pressures and energy risks persist.
Commerzbank's analyst Tatha Ghose anticipates the Hungarian Central Bank, Magyar Nemzeti Bank (MNB), to lower its base rate by 25 basis points to 5.50% in the upcoming decision. However, Ghose emphasizes that the level of guidance provided by the bank will have a more significant impact on the Hungarian Forint (HUF). While headline inflation has been lower than expected, persistent core and services pressures, along with energy risks, suggest that the situation is not yet a clear disinflation story.
The MNB is expected to cut rates at its meeting this afternoon, but analysts are unanimous in their prediction. The actual rate cut will not provide new information about the bank's outlook. Inflation accelerated month-over-month in July, surpassing the target. Although the forint has been affected by MNB's rate-cutting cycle, regional inflation risks still persist.
MNB is in a phase of lowering interest rates, but if Mihaly Varga merely states that further cuts are available in September, the market may perceive an unconditional easing stance. If the MNB's signals remain too dovish, the forint could continue to face downward pressure.
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