Bloomberg News

Hungary Rate Rise Needs ‘Disorderly’ Forint Drop, Nomura Says

October 06, 2011

Oct. 6 (Bloomberg) -- Hungary’s central bank may only raise interest rates if there is a “disorderly deterioration” in the currency, Nomura Plc said after meeting Magyar Nemzeti Bank President Andras Simor in London.

“We maintain our core view that it is difficult to see the triggers for the central bank hiking without a significant and disorderly deterioration in the currency and risk premia” rising because of domestic factors, London-based Nomura economist Peter Attard Montalto said in a research report today. “As such we maintain our baseline of rates on hold through the end of next year but with risks much more skewed to the next rate being a hike rather than a cut.”

Raising the benchmark interest rate would probably take precedence for the central bank over intervention in the currency market to bolster the forint, Nomura said.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Zoltan Simon at zsimon@bloomberg.net


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