The Monetary Council is expected to be more or less passive at tomorrow's meeting

HUNGARY - In Brief 29 Jan 2018 by Istvan Racz
The Monetary Council is scheduled to hold a rate-setting meeting tomorrow (January 30). Analysts unanimously expect the Council to leave interest rates untouched, and to do or say little new in general on this occasion. The widespread analyst expectation appears to be that the MNB is going to remain focused on its new yield-curve flattening instruments, the recently announced interest rate swaps and mortgage bond purchases, and that will take more of implementation than new policy talk over the next few weeks.We by and large agree with this overall judgement. Maybe the Council could offer additional specifics on mortgage bond purchases tomorrow. But on the MIRS, it has just amended its rulebook after the first auction (see our previous note on the subject), and the second auction will be held according to the new fixed-rate rule on Thursday this week (February 1). On this occasion, the MNB may want simply to get through with its minimum fixed rates proposed for the first (January 18) auction (0.46% for 5-years and 1.17% for 10 years). Following that, the MNB could just wait and see how much of lowering it can achieve at the longer end of the government bond yield curve, and draw its conclusions in a month or two.

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