Analysts See More Rate Hikes In Hungary In 2011

  • 19 Dec 2010 6:00 AM
Analysts See More Rate Hikes In Hungary In 2011
"The National Bank (MNB) will keep the base rate unchanged at 5.5%, but raise them again before very long, according to analysts surveyed by Napi Gazdasag. Takarekbank’s Gergely Suppan said the MNB will wait until early 2011 to raise rates, which will come on the heels of higher inflation figures than expected in December and January.

The MNB would have to re-evaluate its inflation goals – not a realistic scenario, Suppan said – were it to keep its rates unchanged in early 2011.

The market tensions present at the time of the last rate-setting meeting on November 29, leading to higher risks on Hungary's debt and rising yields on the bond market, have since subsided, according to Budapest Alapkezelo economist Daniel Bebesy.

Serious risk factors could come into the picture next year, he continued, prompting investors to rethink their strategy, with Hungarian assets likely to go underweight.

Bebesy expects demand for Hungarian bonds to fall with the disappearance of private pension funds as buyers.

Questions about the replacement of the MNB’s monetary council members next March and the risk from euro-zone debt problems will resurface, he argued.

MKB analyst Zsolt Kondrat was of the contrary view, projecting a rate hike by the MNB on Monday. He said the factors cited by the central bank for the monetary tightening in November still exist."

Source: Hungary Around the Clock

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