FXStreet (Edinburgh) – Strategist Paul Fage at TD Securities assessed today’s decision by the NBH to lower its benchmark rate by 15 bp, more than the 10 bp anticipated.
Key Quotes
“At today’s MPC meeting, the National Bank of Hungary (NBH) cut its key policy rate, the base rate, by 15 bps to 1.35%. This was more than the 10 bps cut we and the consensus were expecting”.
“However, the real surprise was that a press conference was held at which NBH Governor Matolcsy announced that the easing cycle had ended. He said that the policy rate will remain at 1.35% ”for a very long time”.
“Most analysts had expected that the NBH would cut the policy rate to 1.3% or 1.2% before calling an end to the easing cycle; we had expected a low of 1.3%. The fact that the cycle has ended at a higher than expected level of the policy rate caused EURHUF to fall by 0.7%. Two-year HUF swaps moved 3.5 bps higher”.
“Looking ahead we expect that the NBH to keep its policy rate on hold until H2 2016. It should be noted that the benchmark policy rate will change in September to a longer-maturity, 3-month rate., representing a de-facto additional easing”.
“We think there is room for EURHUF to fall further and we are targeting 303”.
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