The Hungarian central bank raised its policy rate by another 100 bps on Tuesday, August 30 to 11.75% and kept a hawkish stance. EUR/HUF declined from higher than 407.00 early in the trading session to near 402.00 by the end. However, economists at Commerzbank are reluctant to change to a more optimistic bullish view.

QT does not tend to carry the same weight as straight rate hikes

“It is difficult to read from this one-day behaviour whether or not the market has truly revised its skeptical view of MNB’s policy stance. Neither the Polish nor the Czech central bank has faced the same magnitude of skepticism from the market when faced with similar circumstances. Last but not least, quantitative tightening does not tend to carry the same weight as straight rate hikes.”

“Given our past experience with market reaction to MNB’s policy changes, yesterday’s near-term (positive) reaction of the forint cannot be assumed to extend to the medium-term.”