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Forint pressured as Hungary's central bank halts rate cuts
Commerzbank said September CPI quickened to 1.6% year over year, while the central bank minutes showed no discussion of either future hikes or further cuts.
Commerzbank highlighted that Hungary’s central bank, the MNB, confirmed in its September meeting minutes a unanimous decision to stop rate cuts, without discussing future rate hikes or additional cuts, adding to uncertainty around the forint’s outlook, according to FXStreet.
The bank pointed to a perceived policy contradiction, saying Hungary’s MNB gave limited guidance as medium term inflation forecasts rose and the inflation target was lowered, but without signaling a move toward tightening.
Commerzbank also flagged inflation dynamics, noting September CPI inflation accelerated slightly to 1.6% year over year, driven by fuel prices, while citing that month over month indicators and underlying core measures were reaccelerating from disinflation territory toward the target.
FXStreet reports Commerzbank’s view was that the forint is likely to stay weak until the MNB adopts a more hawkish stance and resolves the inconsistency in its policy messaging.