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COUNTRY INSIGHTS

What slowdown? The economy is overheating
HUNGARY · Report · 15 May 2019

GDP growth accelerated to a new high in Q1 2019, in the face of the weak Eurozone economy. This looks like a regional phenomenon typical of Central and Eastern Europe: Poland, Romania and Hungary all reported GDP growth around 5% in the first quarter of this year. A relocation of output from West...

Expect robust Q1 GDP data tomorrow
HUNGARY · In Brief · 14 May 2019

Analysts expect 5.1% yoy GDP growth by unadjusted data for Q1 to come out from the KSH tomorrow at 9am BUD time. This would be unchanged from Q4 2018 and contrary to everyone's forecast that growth would slow down markedly in Hungary, following the European trend, this year. Even though there hav...

Inflation rose further, core inflation down on a base effect in April
HUNGARY · In Brief · 09 May 2019

Well, the analyst consensus proved to be a bit too pessimistic, whereas we were a bit too optimistic about April's CPI-inflation data, as it turned out this morning. However, the crucial point is that essentially everyone was right to expect rising inflation for the month.Specifically, the headli...

Analysts expect CPI-inflation yet higher in April
HUNGARY · In Brief · 08 May 2019

The April CPI-inflation data is due at 9am BUD time tomorrow. Analysts polled by Portfolio.hu expect the headline rate at 4% yoy, rising further from the 3.7% yoy measured for March.We feel this forecast is a little bit exaggerated in the negative direction. We expect +4.5% mom for fuel prices, o...

The BOP deteriorated in early 2019
HUNGARY · In Brief · 07 May 2019

On April 30, the Monetary Council's communiqué specifically said on the balance of payments: 'In February 2019, the current account balance improved, to which both the stable services balance and the renewed rise of the goods balance contributed.'This, somewhat loosely worded, brief statement was...

No rating action, no new report from Moody's yesterday
HUNGARY · In Brief · 04 May 2019

A certain part, though probably not the majority, of the market may be disappointed by the fact that Moody's did not take any action on their Baa3/Stable sovereign rating for Hungary at their pre-announced revision date yesterday. Moreover, Moody's did not even pick up the issue, missing the oppo...

The MNB will start to buy corporate bonds in July
HUNGARY · In Brief · 30 Apr 2019

Pretty much as we predicted yesterday (and others slightly earlier), the Monetary Council left all MNB interest rates untouched today, in addition to saying nothing new about the prospective use of FX swaps to tighten liquidity. Moreover, they made absolutely no mentioning of any need to tighten ...

No policy change is likely at tomorrow's rate-setting meeting
HUNGARY · In Brief · 29 Apr 2019

Following a relatively long Easter recess, during which nothing much happened in Hungary, except for the political theatre preceding the late May European election, economic decision-making is to become more active again. Tomorrow (on April 30), the Monetary Council's monthly rate-setting meeting...

'Tightening' has made monetary conditions looser
HUNGARY · Forecast · 17 Apr 2019 · 1 response

On March 26, the MNB carried out a small policy tightening, for the first time since December 2011. However, what was done fell short of the market’s expectations, and so it led to a moderately weaker forint and, consequently, to somewhat looser monetary conditions. This was because the MNB combi...

Inflation beat the analyst consensus again in March
HUNGARY · In Brief · 09 Apr 2019

But unfortunately in the wrong direction. The headline rate came out at 0.7% mom, 3.7% yoy, the latter up from 3.1% yoy in February. This indeed beat expectations, as the analyst consensus (including us) expected 3.5% and the MNB itself projected 3.6% in its late-March inflation report.As a matte...

Headline CPI-inflation to have risen again in March
HUNGARY · In Brief · 07 Apr 2019

CPI-inflation data for March is due on Tuesday, April 9. Following 0.6% mom, 3.1% yoy for the headline rate in February, we expect 0.5% mom, 3.5% yoy, i.e. the year-on-year rate to pull away from the 3% target in the upward direction.Much of this would be due to fuel prices, which we see at +2.5%...

Another tiny MNB step in the tightening direction
HUNGARY · In Brief · 02 Apr 2019

Following a 10 bps increase in the O/N deposit rate from March 27, the MNB carried out its second small step on its road towards monetary tightening yesterday. This was a HUF10bn reduction of the outstanding stock of FX swaps, to HUF1979bn, from April 3 as the value date.As well known to the read...

Explanatory statement from the MNB: no policy cycle, next revision in late June
HUNGARY · In Brief · 28 Mar 2019

MNB vice governor Márton Nagy made an interesting statement at an investment seminar today, providing some explanation, but also a refining, to the view presented by governor Matolcsy right after the Monetary Council meeting on Tuesday, March 26.Mr. Nagy essentially repeated the Governor's words ...

The MNB was seen balancing between loose and tight today
HUNGARY · In Brief · 26 Mar 2019

The MNB acted somewhat strangely today. It carried out its first tightening moves in seven years, by raising the O/N deposit rate by 10 bps, to -0.05%, and by reducing its target on the quarterly average excess liquidity of banks by HUF100bn, which should imply a HUF130bn reduction of the existin...

Tomorrow's Monetary Council: most analysts expect a little tightening of some kind
HUNGARY · In Brief · 25 Mar 2019

The Monetary Council is to hold its March rate-setting meeting tomorrow, this time combined with the discussion of the Q1 inflation report, i.e. an especially good time to carry out a policy change if any. Most analysts seem to agree that some kind of tightening is likely on this occasion, but th...

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