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COUNTRY INSIGHTS

Warning from the MNB: FX swaps can move both ways
HUNGARY · In Brief · 26 Jul 2019

The lack of any tightening measure and a further little change in the statement's language towards a more relaxed mode at Tuesday's (July 23) rate-setting meeting, combined with the ECB's softening tone yesterday, have pushed the forint to slightly weaker levels, to EURHUF 326.5 and USDHUF 293.2 ...

Today's rate-setting meeting was almost a non-event
HUNGARY · In Brief · 23 Jul 2019

The Monetary Council made sure that today's monthly rate-setting meeting became genuinely uninteresting, but that was fully in line with everyone's expectation. The Council did not take any action on this occasion, and its statement became slightly more relaxed than a month ago.The statement took...

Revisions are due everywhere, from GDP to fiscal and monetary policy
HUNGARY · Forecast · 18 Jul 2019

Compared to our previous medium-term forecast, released in April, there are no fewer than five areas where material revisions seem to be justified. First, we are raising our forecast for this year’s GDP, despite maintaining the view that growth should indeed decelerate in H2 and next year. Second...

Mostly good news on CPI-inflation in June
HUNGARY · In Brief · 09 Jul 2019

This morning's release of the June CPI-inflation data resulted in decreases by the yoy rates of three of the four key indicators, whereas the fourth one remained unchanged. Most importantly, the headline inflation rate fell to 3.4% yoy from the 3.9% yoy reported in May, and the MNB's main policy ...

Retail sales, wages decelerate on tight fiscal policy and higher inflation
HUNGARY · In Brief · 05 Jul 2019

Retail sales growth decelerated in May, to 4.7% yoy in real terms and on seasonally and day-adjusted basis, from 6.1% yoy in April and 5.8% yoy reported for Q1.The local press and various private sector speakers are quoting the markedly lower unadjusted and day-adjusted figures (3% yoy and 2.6% y...

Distribution of EU positions: the worst has been avoided, but that is all
HUNGARY · In Brief · 04 Jul 2019

Looking at the results of the recent days' horse-trading around leading EU positions, one might easily have the impression that, from the Hungarian government's perspective , the worst of the potential outcomes has been avoided but the whole process was no great success at all.Of course, the star...

Always tricky: central bank policy is tighter than it looks
HUNGARY · In Brief · 25 Jun 2019

Comparing today's policy statements with actual MNB activity, one might come to the conclusion that the central bank is secretly tightening its policy, in spite of its contrary talk.On the one hand, today's Monetary Council meeting, the key quarterly rate-setting event as declared by the Bank rec...

Monetary policy done by the Treasury once again
HUNGARY · Report · 18 Jun 2019

Detailed GDP data for Q1 revealed that the unchanged strength of growth, amidst the relative weakness of the European economy, came to a great extent from an extraordinarily robust performance by the construction sector. Here, the coincidence of massive infrastructural, industrial, office and res...

MÁP+ appears as a new factor in monetary policy
HUNGARY · In Brief · 12 Jun 2019 · 1 response

MÁP+, the government's new 5-year retail bond started with a spectacular success. The Treasury sold a massive HUF529bn of it between between June 3-7, the first week following its debut. This raised the outstanding amount of retail bonds to HUF8060bn, according to finance minister Varga. Or perha...

Further bad news on inflation in May
HUNGARY · In Brief · 07 Jun 2019

The May CPI-inflation data came out this morning. In sum, the long-standing rising trend of the various indicators returned, following the mixed picture seen in April, which was then blurred a bit by a favourable one-month base effect.The headline inflation rate remained at 3.9% yoy, unchanged fr...

Surprise, surprise: the draft budget for 2020 aims at a fiscal deficit of 1% of GDP only
HUNGARY · In Brief · 05 Jun 2019 · 1 response

Finance minister Varga delivered the draft budget for 2020 to the president of the National Assembly (the parliament) yesterday. Surprisingly, the draft aims at a general government deficit of 1% of GDP only. This is despite the fact that in the government's annual convergence report, out in late...

Monetary tightening is happening at last, slowly, slowly
HUNGARY · In Brief · 04 Jun 2019 · 1 response

The MNB held the stock of its FX swaps unchanged at HUF1725bn yesterday. This was the third weekly tender in a row that the swap stock did not change, following the previous one-and-a-half months of steep reduction.The fact that the reduction of the FX swap stock has been stopped does not mean in...

Finance minister Varga spoke about the pleasant part of fiscal plans the other day
HUNGARY · In Brief · 01 Jun 2019 · 1 response

The government is just about to deliver to parliament the draft budget plan, together with the adjoining tax package, for 2020. Probably on this occasion, finance minister Varga appeared publicly on May 30, announcing 13 measures, including tax cuts and refunds, steps to simplify the tax administ...

Today's Monetary Council: No measure this time either, just as expected
HUNGARY · In Brief · 28 May 2019

The Monetary Council's regular monthly rate-setting meeting today has brought about to no policy change at all, just as expected. Logically so: given the MNB did not tighten policy in any material way between September 2018 and April this year, when adjusted core inflation was rising, why would h...

European elections: one piece of good news and two pieces of bad news for Mr. Orbán
HUNGARY · In Brief · 27 May 2019

At first glance, PM Orbán came very well out of the European Parliament elections held at the weekend. His Fidesz-KDNP coalition won 52.4% of the Hungarian vote, which is a better result than the 47.4% they collected at the latest parliamentary election in March 2018. By this popular vote, Fidesz...

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