Outgoing member of the Monetary Council sends out a hawkish message

HUNGARY - In Brief 07 Feb 2025 by Istvan Racz

---

Just a few days before the release of the January CPI data on February 11, Monetary Council member Gyula Pleschinger spoke to Reuters, saying the following: - CPI-inflation may have run above 5% yoy in January, and is likely to return to the MNB's 2-4% target range only by the end of 2025;- average CPI-infation is rising to 4.1-4.2% this year, following 3.7% in 2024; and mainly- he sees no room for any base rate cut by the MNB in 2025. This is a very strong hawkish message, as the standing forecast of the MNB for January CPI-inflation is 4.6% yoy, even though the latter was issued in late December, and since that time, the December data has become known, overshooting the Bank's forecast by 0.3%-points. In addition, Portfolio.hu's poll in late January showed that the median expectation of its 15 contributing private sector analysts was between two or three 25 bps rate cuts by the MNB before end-2025. The weight of Mr. Pleschinger's statement was augmented by the fact that he spoke to the widest possible audience through Reuters, but very importantly, it is reduced by the fact that he is going to leave the Monetary Council soon. Mr. Pleschinger is not a member of the outgoing executive management of the MNB, but he was appointed to the Monetary Council with effect only one day after Mr. Matolcsy took over as governor in 2013, and his second 6-year term expiring, he is going to leave on March 4 this year, once again, one day after Mr. Matolcsy has stepped down as the head of the Bank. With some stretch of the imagination, his current statement could be speculatively construed as a kind of an unofficial view of the whole outgoing MNB management. However, this represents on...