National Bank of Hungary likely to keep policy rate unchanged in August

The Hungarian central bank, National Bank of Hungary, is set to meet next week for its policy decision. According to a Barclays research report, the National Bank of Hungary is expected to keep the deposit rate on hold at 90 basis point.

Because of labor shortages, wage inflation in the nation has been rising at double digit levels, with the latest reading at 12.9 percent year-on-year in May, which is likely to rise to 13.5 percent year-on-year in June. In spite of the strong rise in underlying inflationary pressure, the National Bank of Hungary is expected to keep policy easy until at least the second quarter of 2018, after the parliamentary election, as Fidez approval ratings are highly correlated with labor market conditions, added Barclays.

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