NBH likely to remain on hold, to meet inflation target by mid-2018

The National Bank of Hungary (NBH) is expected to keep its key interest rate unchanged at the monetary policy meeting scheduled to be held today as its policy is still focusing on non-standard monetary trolls. This is despite a stronger domestic demand, buoyed by strong wages and retail sales growth of the country.

Moreover, the NBH provided extra liquidity (around HUF200 billion) for the market on Monday via 1-month swap at 0 percent interest rate. So it continues the easing of its monetary policy.

It is to be noted that roughly HUF 500 billion will be forced out from the NBH till the end of the year, thanks to the introduction of the maximum cap on the 3-month deposit. So, the NBH has been successfully working on lower Bubor interest rates and indirectly on a weaker forint.

In its framework, the NBH has made 200 billion HUF swap deal with commercial banks, and the same amount dealt last week. Meanwhile, the NBH increased the interbank HUF liquidity with 400 billion HUF in the last two weeks.