In addition to the general development linked to its high beta with euro movements, today’s interest rate decision by the Hungarian central bank (MNB) is also of interest for the Forint. This is mainly due to the nuances in the statements and less to the interest rate decision itself, notes Commerzbank FX analyst Antje Praefcke.
Abstention from a cut would be positive for the Forint
“Most analysts surveyed by Bloomberg expect the NMB to cut its key interest rate by 25 basis points to 6.75% today anyway, continuing the slower pace of its rate-cutting cycle that it has been displaying since June, as the headline inflation rate fell slightly more than expected in June to 3.7% from 4.0%.
“But the exponentially smoothed month-on-month change actually accelerated in June to a record 0.5% for ‘tax-adjusted core inflation’ and 0.6% for ‘demand-pull inflation’. The FX market is concerned that dovish MNB members might push for further interest rate cuts during the year or that the government might push for interest rate cuts in view of the further weakening real economy and the need to make savings in the budget.”
“Therefore, the nuances of today’s MNB meeting are likely to be important. If market concerns are confirmed by the MNB’s statements, the Forint could suffer. On the other hand, it would be a positive surprise if the MNB decided to pause today and refrain from a rate cut. The Forint would benefit from an MNB decision to remain restrictive accordingly.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
