Sterilisation rate is expected to drop to 15% tomorrow

HUNGARY - In Brief 24 Jul 2023 by Istvan Racz
The Monetary Council is set to meet tomorrow. Analysts in Portfolio.hu's poll unanimously expect a 100 bps reduction of the O/N deposit rate, the effective sterilisation rate, to 15% on this occasion. The poll's median expectation for December is 10.5%, based on the generally shared optimistic forecasts on rapidly decreasing CPI-inflation. Our current forecast for December is 11%, except if EURHUF makes attempts to rise above 400 in the rest of this year, in which case we would expect the MNB to slow down the pace of its rate cuts. For end-2024, the median analyst currently forecasts 6.5%, which we find too aggressive at the moment. Here is a chart on the historic development of MNB interest rates:

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