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The MNB are making another effort to chase money out of their balance sheet
HUNGARY · In Brief · 03 Jun 2015

No doubt, policy-makers at the central bank have been pushing the pedal hard in recent days. Just a few days following our previous post, which reacted to their base rate cut last week, they announced a reform of the MNB's monetary tools and mechanism yesterday, to take effect in three months fro...

Post-rate-cut EURHUF and declining fixed investment in Q1 point to further monetary easing
HUNGARY · In Brief · 29 May 2015

1. The MNB's third cut in a row of its base rate on May 26, by another 15 bps this time and by a total 45 bps in total over the last three months, to 1.65%, has not affected the EURHUF immediately, which is no big surprise, as the move was fully in line with the broad market consensus. 2. However...

Improvement of outlook on Hungary's BB+ by Fitch Ratings puts policy pressure on the government
HUNGARY · In Brief · 23 May 2015

There can be few things on the face of the Earth that the Hungarian government want more than getting back their investment grade credit rating. Once again, they did not get it yesterday, as Fitch Ratings issued a press release on Hungary, but they got a big step closer to the goal, as Fitch anno...

Growth & Fiscal Policy Remain Largely Intact
HUNGARY · Report · 13 May 2015

Executive Summary Preliminary Q1 2015 GDP (+0.6% qoq, +3.1% yoy sda) was slightly down from last year but growth is still running at relatively high pace, due to strong consumer demand and impressive export data. The government’s 2015 GDP forecast has been raised to 3.1%, suggesting that the econ...

Assessing the latest MNB rate cut and fiscal announcements
HUNGARY · In Brief · 23 Apr 2015

That the MNB reduced its base rate by 15 bps to 1.8% on April 21 was almost a non-event in the sense that essentially everyone on the market expected exactly this. That the rate cut had absolutely no immediate impact on the EURHUF exchange rate, which has been stuck in a narrow 297-302 range over...

Unsustainable Forint Strength
HUNGARY · Forecast · 13 Apr 2015

Executive Summary Analysts have been essentially right in their recent assessments that the Hungarian economy is likely to experience a pretty good year in 2015, with reasonably high growth, very low inflation, combined with limited fiscal deficit, a slightly decreasing government debt ratio and ...

New output, trade and inflation data mark moderate slowdown, predict further MNB rate cut
HUNGARY · In Brief · 09 Apr 2015

Industrial output (gross output in real terms) rose 5.8% yoy in February, implying 5.6% yoy growth in Jan-Feb 2015. This looks like continued decent growth. But the right comparison to see how the economy's overall growth dynamics is moving from last year is the one against 7.1% yoy expansion rec...

A strange MNB base rate cut: monetary conditions have tightened substantially
HUNGARY · In Brief · 25 Mar 2015

As reported on the screens, the MNB reduced its base rate by 15 bps to 1.95% yesterday, against the average market expectation of a 20bps rate cut (which we shared). In addition, they presented a new inflation report, which is markedly more optimistic than the previous one.The MNB now expects 0% ...

A Big Growth Surprise from Net Exports
HUNGARY · Report · 13 Mar 2015

Executive Summary Detailed GDP figures for Q4 2014 show that the unexpected strength of output (+0.8% qoq sda) was mainly due to a pick-up in net exports. Consumer demand was also relatively strong, while fixed investment was losing momentum, and inventory accumulation remained markedly negative....

Banking Sector: A Big Move Back Towards Normality
HUNGARY · Report · 11 Feb 2015

Executive Summary Life in the domestic banking sector has been unusually eventful in recent weeks. In a surprise move, the government signed a memorandum of understanding with the EBRD on its future policy intentions regarding the banking sector. Committing to bank privatization, the reduction of...

Domestic retail debtors of CHF mortgages remain unaffected by the SNB's move of yesterday
HUNGARY · In Brief · 16 Jan 2015

In our Quarterly Report, out early this week, we expected a weaker forint for 2015, but we did not think it would come about as quickly as it did. In the wake of the Swiss National Bank's decision yesterday, EURHUF has strengthened by 1%, to 323, and CHFHUF has jumped by no less than 52 units, to...

CPI-inflation deeply below consensus in December 2014
HUNGARY · In Brief · 14 Jan 2015

CPI-inflation for December 2014 is out this morning: -0.7% mom / -0.9% yoy (-0.7% yoy in November). The consensus expectation was -0.4-(-0.5%) yoy in various polls. Core inflation is down to 0.8% yoy from 1.2% in November, and our estimate of the underlying inflation rate is down very sharply, to...

2015: Slow Growth, Low Inflation, Weaker Forint, Stable Budget
HUNGARY · Forecast · 12 Jan 2015

Executive SummarySince our previous Quarterly Report in October 2014, Hungary’s outlook has not changed dramatically, though it has been significantly modified by external factors like sharply falling crude oil prices, the weakening of the European business cycle, and the most recent deterioratio...

The Impact of Russia: No Jitters but No Rate Cut Either
HUNGARY · Report · 17 Dec 2014

Facts The turmoil about the Russian currency in recent days has not left the Hungarian forint and government bonds unaffected, but so far the negative impact has been moderate on both markets. The forint fell by close to 2% vis-à-vis the euro over the past two days, and a correction of similar si...

An Unexpected Turn in the Polls
HUNGARY · Report · 08 Dec 2014

Executive SummaryOur main story this month is, somewhat unexpectedly, about politics. Less than two months after its third impressive election victory this year, the governing Fidesz-KDNP alliance’s popularity has fallen markedly, as reflected by latest polls, a number of street demonstrations an...

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