Hungary: Strong cut to put pressure on HUF – Commerzbank

Economists at Commerzbank analyze Forint’s outlook ahead of the Hungarian National Bank (MNB) Interest Rate Decision.

MNB should act cautiously to avoid creating downside risks for the Forint

A rate cut in line with market expectations is likely to be neutral for the Forint, a continued hawkish tone in the statement might even be slightly positive. If the board decides for unchanged interest rates in a surprise move, I would expect a pronounced upward move in the Forint.

A strong cut on the other hand would put pressure on the HUF, above all if it should then turn out that inflation does not ease as quickly as expected after all. The October data, due for publication the week after next, are likely to be extremely important for the Forint, particularly in that case.