Hungary's Monetary Council is scheduled to hold its first policy meeting in 2008 on 21 January. The benchmark interest rate currently stands at 7.50%.
Our view National Bank of Hungary (NBH) President Simor pointed out in late 2007 that monetary policy had to emphasise price stability. Inflation amounted to 8.0% on average in 2007, way above the target of 3.0%, and 7.4% in December (higher than forecast). In the light of this and given continued global financial market jitters, we see no room to cut rates in January. That said, it's not a foregone conclusion, as there is a considerable number of Monetary Council who we believe would prefer to see lower rates. However, we believe the majority will retain caution and leave rates on hold in January.