Actual 2W repo: 6.00 %
Consensus: 6.00 %
Previous: 6.00 %
Interest rates stay unchanged, as expected. Although a hike was discussed at the last MNB meeting, an overwhelming majority voted for keeping rates on hold. Moreover, the MNB sees the external demand outlook worsening, which will lead to a marked disinflation. The impact of VAT and excise tax hikes on inflation is expected to be temporary; inflation can reach 3 pct once the effect exits inflation in the 1H 2013.
According to new MNB projections, GDP growth should slow from 1.6 pct this year to 1.5 pct in 2012. The figures are significantly below the previous projections (2.6 and 2.7 pct, respectively). Inflation is seen at 3.9 pct both this year and in 2012 (previous 3.9 and 3.6 pct).
Risk premia have risen due to a global economic downturn and the Eurozone debt crisis. The forint have weakened in the past month, which raises a possibility of lifting interest rates. However, one of the risk factors is also the last government FX plan for mortgages that could, in result, lead to tighter lending conditions and weigh on household demand. This, on the contrary, is an argument against lifting the rates.
The conclusion of the meeting - keeping a wait-and-see stance - is thus a logical result of higher uncertainty, when risks are rising on both sides.