Hungary: Inflation expected to accelerate further to 3.3% in July - TDS

Analysts at TD Securities suggest that Hungary’s July inflation is expected to accelerate further to 3.3% Y/Y from a prior 3.1%, which is going to mark a new high since the start of 2013.

Key Quotes

“With a CPI target of 3.5%, inflation rising steadily, and still ultra-loose monetary policy, the market will also be interested in what the NBH has to say in its minutes from the last Monetary Council meeting held on 24 July.”

“At that meeting, the MC held the key rate on hold at 0.9% and the O/N depo rate at -0.15%. They then reiterated that "In the Council’s assessment, maintaining the base rate and the loose monetary conditions is still necessary to achieve the inflation target in a sustainable manner," though the MC admitted that they may not be able to hold the stance of policy as loose as it is now for a 5-8 quarter policy horizon.”

“We will also be interested to understand what the MC makes of the HUF re-strengthening after the last meeting (ca. 2% vs EUR).”