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Friday, December 8, 2023

Hungary. Interest rates – reference rate down, comments

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The National Bank of Hungary (MNB) on Tuesday decided to reduce the main interest rate by 75 basis points to 12.25 percent. The market consensus assumed a cut of 50 basis points. “This is the first rate cut in Hungary since 2020,” said representatives of the Oanda TMS Brokers brokerage house.

The market consensus, i.e. the median of analysts’ forecasts, assumed a cut of the MNB reference rate in October by 50 basis points. up to 12.50 percent Although Goldman Sachs analysts predicted a deeper cut – by 75 bps, noting that the previous central bank statement included a statement about maintaining the “current pace” of rate cuts (100 bps), and MNB representatives pointed out that the policy of rate cuts was not on track. “autopilot”.

Interest rates in Hungary

“The Central Bank of Hungary is changing the level of interest rates for the first time in a year and lowering them by 75bps (from 13% to 12.25%) with expectations of a reduction of 50bps,” wrote Marcin Mierzwa, an analyst at stooq.pl, in a commentary.

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Representatives of the Oanda TMS Brokers brokerage house pointed out that this is the first main reduction in 3 years interest rate in Hungary.

“Today, the Central Bank of Hungary reduced its main interest rate from 13% to 12.25%. This is the first rate cut in Hungary since 2020. Economists expected a smaller reduction to 12.5%. The annual CPI growth in Hungary was September this year 12.2 percent.” – we read in the comment.

Despite braking inflation over Lake Balaton, this Hungary still has the highest inflation in the entire European Union. According to data from the EU statistical office Eurostat, Hungary has remained the leader of the inglorious ranking since November 2022. It is the only country with a double-digit price increase. In September on Lake Balaton, inflation was 12.2%. Every year.

Previously in Hungary we had to deal with lowering the overnight deposit rate.

Main photo source: A great shot of/Shutterstock

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