National Bank of Hungary Keeps Rates on Hold

Well, given the wages data we saw at the end of last week, yesterday's decision by the NBH is hardly surprising:

Members of the Hungarian Monetary Council have on Monday voted to keep rates on hold (actual outcome) and not to reduce the 7.75% base rate by 25 basis points, NBH Governor András Simor told a press conference after the policy meeting.

“The decision was rather unequivocal, but individual members did think a lot about which side to take," Simor said, reiterating that a breakdown of votes will not be revealed before the minutes of today's meeting is published on 17 August.

My feeling is that the NBH will be very cautious in lowering rates, more due to caution concerning the uncertain impact on the Forint than anything else. Headline inflation should drop considerably as we get into the autumn.