MNI NBH Preview - Feb'25: Stronger Hawkish Guidance Expected

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Executive Summary:

• The National Bank of Hungary is expected to keep the base rate on hold at 6.50% again this month, though guidance may shift in a further hawkish direction following cautious inter-meeting communication from the MPC.
• The previous policy statement removed any reference to the possibility of rate cuts while the January inflation print came in well above expectations - leaving scant opportunity for easing in the near-term.
• Among sell-side, no analyst view we have surveyed expect to see any change to the base rate this month, with many now expecting the base rate to remain on hold through the remainder of the year. 

The consumer price index surged +5.5% Y/Y in January, the fastest pace in 13 months, up from +4.6% in December, according to the Hungarian statistics office. Month-on-month, prices climbed 1.5%. While the NBH had warned that headline inflation was expected to peak in January, the data came in well-above market expectations of a more moderate climb to +4.8%.

Meanwhile, MPC Board Member Gyula Pleschinger said Hungary’s central bank has no room to cut the key policy rate this year, while a hike is also “unthinkable.” While Pleschinger is a known hawk among the MPC, his comments could precede a shift in comms from Deputy Governor Virag given that it is fairly unusual to hear from NBH board members in between meetings. Specifically, Virag may reiterate Pleschinger’s view that rates are likely to remain on hold through the year in his post-decision press conference.