HUF: Expect NBH to keep all rates unchanged - TDS

At today's Monetary Council meeting of the NBH, analysts at TDS are in line with the unanimous consensus and expect all rates to remain unchanged.

Key Quotes

“In particular we expect the policy rate to be kept at 0.9% and the O/N Deposit Rate to be kept at -0.15%. The language in the statement is likely to maintain a dovish bias. Over the medium term inflation is expected by the NBH to be driven higher by buoyant domestic demand, wage hikes, and higher commodity prices. However, this will be partially offset by moderate external inflation, low inflation expectations, as well as reductions in employers' social contributions, and VAT rate cuts announced for this year.”

“Consequently the rise in inflation is expected by the NBH to be slow and the 3% inflation target will be achieved sustainably only by the middle of 2019. However, given the strong economy and rapid wage growth we think the risks are skewed towards inflation rising faster than the NBH forecasts.”