The Hungarian National Bank (MNB) is expected to hike its main policy interest rate by 50bp today. Forint’s underperformance of late is likely to extend following the central bank rate decision, economists at Commerzbank report.

MNB expected to hike rate by 50bp

“The underperformance of the forint suggests that the market is concerned about inflation projections proving unrealistic all over again, which means that MNB’s policy stance could quickly fall behind the curve.”

“The current inflation context does not offer MNB the luxury to signal a ‘routine’ phase of policy regardless of incoming data.

“The anticipated 50bp rate hike today will likely not support the forint specifically, and it will be up to the MPC to sound more hawkish in their remarks later on. As base-case, we expect the forint’s weak streak to extend further.”