Hungarian central bank likely to keep policy stance on hold, CNB unlikely to change interest rates in May

The Hungarian central bank is set to meet tomorrow for its monetary policy decision. According to a KBC Market Research report, the National Bank of Hungary is expected to keep its monetary stance on hold, looking at the current macro data including the wage figures.

Hungarian inflation continues to be close to the lower edge of the central bank’s inflation target range. Moreover, the vice-governor began to talk about low level of loans’ stock and they underpin an aggressive rise of the stock in the next 10 years. It implies that the central bank will not be in haste with rapid rate hikes, which might put some softening pressure on the HUF in medium term.

Meanwhile, the Czech National Bank is set to meet next week where it is expected to keep its rates on hold. The present low inflation rate, 0.6 percentage point below the central bank’s projection, also underpins a pause in hiking rates. According to KBC Market Research, even if the Czech koruna is not expected to appreciate strongly and wage growth in the economy would probably surpass the expectations of the CNB. Therefore, the CNB is expected to hike the repo rate in the second half of the year.

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