No policy change, no surprise at all at today's Monetary Council meeting

HUNGARY - In Brief 23 Feb 2021 by Istvan Racz
At its regular monthly rate-setting meeting today, the Monetary Council concluded exactly as we predicted in our monthly report published yesterday. The market also remained fundamentally unsurprised by the decision.The Council kept all policies unchanged and issued a statement that sounded rather cautious as regards the potential for rising inflation later this year. The statement stressed the unusually high degree of uncertainty, and it said that the single biggest risk factor of the domestic inflationary outlook currently is the increased risk aversion on financial markets with regard to emerging markets. This can be translated as a worry about the forint exchange rate. The statement further stressed that the weekly setting of the 1-week deposit rate is intended to serve as a flexible tool to react to market sentiment.In other words, the key way to contain domestic inflation is seen by the Council in maintaining the forint's stability against the euro, its benchmark currency. This sounds very logical to us, especially as the current relatively elevated level of inflation was generated mainly by last year's HUF depreciation against the euro.The next rate-setting meeting will be held on March 23, when the Council also expects to discuss the Q1 inflation report. Based on current knowledge, we do not expect any significant change in the outlook and in policies on that occasion either.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.