KBC Market Research Desk
KBC Bank
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Hungarian forint hits yet another three-month low
NBP should not cut rates, but may sound dovish
On Tuesday, regional PMIs for June eventually had no significant impact on trading. The Hungarian forint continued to weaken anyway and hit yet-another three-month low against the euro. Apart from a dovish bias of Hungarian central bank, the European Commission warning could also have contributed to the forint’s weakening. European commission has warned that the country may again face excessive debt procedure early next year, if it does not proceed with the consolidation of public finances.
Today’s eye-catcher undoubtedly is the meeting of the National Bank of Poland. Even though the recently released macroeconomic statistics (retail, industry for May) lagged behind expectations and Poland’s inflation rate is likely to fall below zero during the summer, the National Bank of Poland should leave rates unchanged at its early July meeting. This meeting will be more interesting as it brings new inflation forecast with downwardly revised inflation forecast. The question still is the bank’s outlook for economic growth in the second quarter, notably in light of the latest statistics. Nevertheless, we still believe that the chances of a rate cut in July are small. If the bank eventually decides to cut interest rates, September meeting, when the GDP data for the second quarter is available, is far more likely timing. More details on a possible autumn rate cut, which we however still see as rather unlikely, will be hinted at in the new forecast, the accompanying comments from the NBP, and in the macroeconomic figures to be released during the summer.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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