MNI NBH Review - Feb'25: Sticking to the Script

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Executive summary:

• The National Bank of Hungary kept its base rate unchanged at 6.50% at the final policy meeting under the helm of Governor Gyorgy Matolcsy.
• Communication in the policy statement and press conference remained hawkish, but not significantly more so than last month.
• Among sell-side, analysts generally expect there to be limited room for easing through the year, but high levels of uncertainty are well-noted.

The tone of the policy statement remained hawkish following the upside surprise to inflation last month. Key guidance was unchanged, with the NBH reiterating that it will continue to adopt a “careful and patient approach to monetary policy.” The statement acknowledged that “incoming data provide evidence that the risk of a higher inflation path this year has increased further”, which they say suggests CPI will return to target later than anticipated in the December inflation report. 

Meanwhile, Virag’s press briefing came and went without any new concrete guidance, though the overall hawkish tone remained. There had been some speculation that comments from known hawk Gyula Pleschinger earlier this month – who said there is unlikely to be any rate cuts through the rest of the year – would be replicated by the Deputy Governor. While he did not go as far as repeating those comments, he did indicate that the base rate could remain at this level “for an extended period,” and that the vote to leave rates on hold was unanimous.