NBH to keep rates on hold today - TDS

In line with the unanimous consensus, analysts at TDS expect the NBH to keep rates on hold today, i.e. the policy rate will stay at 0.9% and the O/N Depo rate at –0.15%.

Key Quotes

“But, as is usually the case with NBH meetings nowadays, the question is, rather than being about rates, more about whether they will conduct any additional “unconventional” easing measures.”

“At the November Monetary Council meeting the NBH announced the introduction of measures aimed at reducing long-term interest rates by holding tenders of 5y and 10y IRS, for which the allocation amount has been set at HUF 300 billion for the first quarter of 2018.”

“The NBH will also purchase mortgage bonds with maturities greater than 3 years, with potentially up to 50% of the roughly HUF 1 trillion outstanding to be purchased. This week the NBH will announce operational details of these new programs, but we doubt they will feel the need to introduce any additional easing measures. They have already called an end to reducing the stock of 3-month deposits at the CB, and, in any event, will continue adding liquidity through FX swaps. We expect the press statement to maintain a dovish bias.”