HUNGARY: ING Continue to Expect No Change to Rates This Year

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• The concept of residual seasonality, whereby data exhibit a seasonal pattern even after adjustment (and seemingly especially so for inflation data), has been a contentious topic.
• Cleveland Fed’s Lunsford finds evidence of residual seasonality across five measures of PCE inflation (headline, core, market-based core, median and trimmed mean) when looking across data from 1987 to Jan 2025. Full note here.
• “For core and market-based core PCE inflation, average inflation in January has been 1.5 to 2.0 times higher than in November and December, again, depending on the sample period.”
• “Following the high inflation from 2021 through 2023, these residual seasonal fluctuations can complicate assessments of monthly data, making it hard to know if inflation is returning sustainably to 2 percent.”
• The research finds the most prominent upward bias is in January alone rather than seeing any lingering into February.
• We note that for February as it comes ahead of Friday’s February report which sees core PCE inflation at 0.3% M/M but perhaps only just rounding down to this rate according to unrounded estimates. It follows 0.285% M/M in Jan, 0.21% in Dec and 0.10% in Nov (before any revisions). 

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