NHB Meeting: Cautious Tone Sets New Expectations for Forint

HUF: NBH to stress caution for the rest of the year

There is only one event on the agenda in the CEE region today and that is the meeting of the National Bank of Hungary. Today's meeting seems like a done deal – the effective interest rate and the key interest rate will be merged at 13%, and monetary policy will thus enter the second phase of normalisation.

The question is what to expect in October and how much today's press conference will indicate. In any case, a cautious and hawkish tone can be expected. This goes against the dovish market expectations, which have priced in rate cuts in the 75-100bp range at the following meetings and high EUR/HUF levels at 390. Thus, the hawkish tone should be an impetus for the market to reassess expectations, especially at the short end of the curve, and support the forint back to levels safely below 390 EUR/HUF.