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Reforms to increase judicial independence has been approved by parliament, but implications on the availability of EU grants remain unclear
HUNGARY · In Brief · 04 May 2023

The National Assembly approved the government's reform package to increase the independence of courts yesterday, as required by the EU Commission for Hungary to gain access to a big part of its currently blocked development grant quotas from the EU. This came after a long series of detailed talks...

A deal has been reached with the EU on Ukrainian agricultural exports into the CEE
HUNGARY · In Brief · 03 May 2023

A few weeks ago, Hungary, following Poland and followed a bit later on by Slovakia, unilaterally banned the imports of Ukrainian agricultural goods, claiming that the removal of quantitative quotas and tariffs by the EU after the start of the war had resulted in heavily increased quantities of im...

A scary net wages figure was reported for February
HUNGARY · In Brief · 26 Apr 2023 · 1 response

The net (after-tax) wages of full-time employees rose by 0.8% yoy in nominal terms in February. This implies a 19.6% yoy drop by real net wages. Yes, indeed, real wages fell by one-fifth compared to February 2022. For the first two months of this year, the corresponding figures were 7.9% yoy grow...

O/N repo rate down to 20.5% at today's rate-setting meeting
HUNGARY · In Brief · 25 Apr 2023

The Monetary Council reduced the O/N repo rate, the ceiling of the MNB's interest rate corridor, from 25% to 20.5% today, maintaining some scope for a potential upward adjustment of the 18% sterilisation rate, in case of a necessity to do so. This fell quite close to analyst expectation, which wa...

Analysts expect the MNB repo rate to be cut to 20% tomorrow
HUNGARY · In Brief · 24 Apr 2023

Tomorrow's monthly rate-setting meeting will be formally a regular one, as to its place in the Monetary Council's preset meeting calendar, but it will be an extraordinary one in terms of importance. The latter is because it has been promised to give away some information regarding the much-awaite...

The MNB said it will likely narrow the interest rate corridor next Tuesday
HUNGARY · In Brief · 19 Apr 2023 · 1 response

MNB Vice governor Virág was quoted by the local press this morning as essentially giving away the decision he expects from the Monetary Council's next rate-setting meeting due next Tuesday (April 25). He said that the conditions appear to be right for the Council to narrow the Bank's interest rat...

One conflict solved, one created
HUNGARY · In Brief · 16 Apr 2023

As we pointed out in our latest report last week, Hungary has a number of bad conflicts with the western world in these days. Over the last few days, one of these was largely sorted out, but another one was just newly created. For the first one, Hungary has just decided to leave the International...

The economy is cooling, with mixed consequences
HUNGARY · Forecast · 13 Apr 2023

In the following new quarterly update of our macro forecast, the key novelty is a more positive view on the forint exchange rate. We still believe that the current EURHUF rate is unsustainable from a competitiveness point of view and requires correction well within this year. But we see more supp...

CPI-inflation for March out: further 'patience' from the MNB will be required
HUNGARY · In Brief · 12 Apr 2023

Well, the CPI-inflation data for March, reported this morning, was just awful. For sure, the headline rate fell a little further, to 25.2% yoy, from 25.4% yoy in February, making March the second consecutive month with a decrease, from the peak 25.7% yoy in January. It is also true that in its la...

Very poor industry and retail sales data in February
HUNGARY · In Brief · 06 Apr 2023

Industrial output fell 4.5% yoy in February, after -3% yoy in January. In Q4 2022, when GDP fell by 0.4% qoq (and expanded by 0.8% yoy), industrial output still grew by 3.9% yoy. The government and the MNB have been expecting positive GDP growth this year on hopes of growing net exports, which in...

Interesting details from the new inflation report
HUNGARY · In Brief · 31 Mar 2023

The MNB's Q1 inflation report was released yesterday. The outlines were communicated already two days earlier, right after the Council's meeting on Tuesday. Nothing revolutionary indeed, but some of the details appear to be interesting. Here are three points on those.1. The short-term rundown of ...

Interest rates unchanged, ending off-market sales of FX to energy importers announced today
HUNGARY · In Brief · 28 Mar 2023

There was no surprise at today's rate-setting Monetary Council meeting: all interest rates, including the 18% sterilisation rate, the 13% base rate and the 12.5-25% interest rate corridor remained unchanged, as expected (see chart below). Yet an important change of policy was announced: the selli...

Still no rate cut is likely at the March 28 Monetary Council meeting
HUNGARY · In Brief · 26 Mar 2023

Predicting the outcome of the March 28 rate-setting meeting, when the MNB's Q1 inflation report is also due to be discussed, appeared quite easy around the middle of this month. By that time, the forint had depreciated to around EURHUF 395, at which level any reduction of the sterilisation rate l...

Foreign policy: one strike right, one strike left
HUNGARY · In Brief · 21 Mar 2023

In recent days, Hungary continued its usual policy outside the mainstream of the EU and NATO, in a way that could be characterised best as uneasy cooperation, an extremely delicate and risky process in our view. For one issue, Fidesz has announced a decision to support Finland's NATO membership, ...

January BOP data slightly disappointing, no rate cut likely on March 28
HUNGARY · In Brief · 17 Mar 2023

Well, January BOP, published today, was not really splendid. If it had been only about the trade account, it would have been great, the annualised single-month deficit ratio falling to 1% of GDP from 2.8% in January 2022, the merchandise deficit doing reasonably well (stable in absolute terms, do...

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