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The NBH has now embraced a fully unorthodox policy mix, built on the premise of managing liquidity, growth and, maybe, inflation via an interest rate corridor plus growth support programs, per TD Securities. EUR/HUF trades at 358.1475.

Key quotes

“The NBH hiked the overnight and one-week collateralized loan rates from 0.90% to 1.85%. This measure creates symmetry in the corridor. We think that its main aim is to increase the carry on long HUF positions so to protect the forint from further weakness.”

“Net-net the NBH seems to be pursuing a twofold strategy: protect HUF by tightening short-term rates, while unleashing an arsenal of unconventional tools to allow the government, banks and other entities access to cheap, longer dated, funding, and by so doing support growth.”