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Analysts at TD Securities suggest that there is little doubt that the NBH will keep all its policy rates on hold at today’s Monetary Council (MC) meeting, and they do not expect any significant change in stance or guidance.

Key Quotes

“July CPI inflation came out at 3.4% Y/Y, ahead of the consensus of 3.3% and up from the prior 3.1%. Higher oil prices have been pushing headline inflation higher for a number of months now, but the NBH is fairly unconcerned about this seeing the move above the 3% target as “slight“ and “temporary“.”

“That said, core inflation also moved higher in July, up to 2.5% Y/Y from a prior 2.4%. However, we don’t think the NBH will be too worried as, since the July MC meeting, EURHUF has been reasonably stable, falling about 0.75%, and oil prices in HUF terms have been pretty much unchanged.”

“We expect the statement to repeat the phrase that “maintaining the base rate and the loose monetary conditions was still necessary to achieve the inflation target in a sustainable manner“ while continuing to say that “the current volatile international environment suggests a more cautious approach“.”