Hungarian central bank likely to keep policy rate on hold

In November, Hungary recorded rises in both consumer and business sentiment, unlike Poland. Hungary’s consumer sentiment recorded a particularly strong increase. However, the GDP and manufacturing data for the September quarter was disappointing, almost the same as Poland’s. Thus, the Hungarian economy is expected to grow 1.3 percent in 2016, said Commerzbank in a research report.

The Hungarian central bank, MNB, is likely to keep its base rate unchanged today during its meeting. However, the central bank is expected to strengthen and extend its quantitative easing and lending schemes in the months ahead. This signifies that the central bank would continue to be more than accommodative than the ECB.

Since subdued exports have resulted in growth underperformance, policymakers are likely to welcome the rise in EUR/HUF currency pair, which is likely to trade at 320 by the first half of 2017, noted Commerzbank.