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Hungary’s  September CPI inflation came out at 3.6% Y/Y, ahead of the consensus of 3.5% and up from the prior 3.4%, notes the research team at TD Securities.

Key Quotes

“As expected, food inflation was the main driver of the move higher, up to 4.65% Y/Y from 4.1%. That the inflation rate is continuing to move above the 3% target rate will be of come concern to the NBH, although they can take some comfort from the fact that core inflation has been somewhat better behaved moving up to 2.4% Y/Y from 2.3%. However, we think that today’s data will bring forward the time at which the NBH will have to start unwinding its current loose monetary policy.”

“The NBH has started flagging that this policy will eventually end and we expect maybe the language to be ramped up a bit in this respect at next week’s rate meeting while leaving current loose monetary conditions unchanged.”