"Hungary’s forint may strengthen against Poland’s zloty as rising inflation in Hungary damps expectations of interest rate cuts, BNP Paribas said on Friday.The HUF is likely to gain to 67 per zloty, analysts at the bank wrote in a note to clients today.
Hungary’s central bank (NBH) may raise its projection for CPI next week in its next quarterly Report on Inflation, Bloomberg cited BNP as saying in a research note.
The NBH will hold a rate setting meeting on Monday, where it is expected to trim its base rate further by 25 basis points to 5.75%, according to analysts’ consensus forecast.
The bank will also unveil its updated key macroeconomic estimates from the Inflation Report that is set to be released on Wednesday.
Hungary’s inflation accelerated to 6.4% yr/yr in January, the highest since August 2008. The central bank projected on 25 Nov the inflation rate would drop below 3.0% (its medium-term goal) by the third quarter and stay below 2.0% in 2011.
"Next week’s inflation projection could be slightly higher than previously, which might cool down expectations of further policy easing, at least in the near term," the bank said. There is likely to be "some profit taking" on the zloty after the currency gained 3.1% against the forint this year, BNP Paribas said in the note."
Source: Portfolio Online Financial Journal
22.02.2010