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Breaking – Hungarian National Bank cut base rate after 1.5 years
The Monetary Council of the National Bank of Hungary (NBH) decided to cut the central bank base rate by 25bp to 6.25pc at a monthly policy meeting on Tuesday.
Base rate cut weeks before the elections
The Monetary Council of the National Bank of Hungary (NBH) decided to cut the central bank base rate by 25bp to 6.25pc at a monthly policy meeting on Tuesday, the Hungarian News Agency wrote.
According to Telex, the base rate cut comes after a 1.5-year hiatus. The National Bank—under different leadership—last trimmed the rate in September 2024, from 6.75 per cent to 6.5 per cent. The outlet noted that markets had anticipated the move, so experts expect minimal impact on the Hungarian forint’s exchange rate. At present, €1 buys 379.15 forint, while $1 fetches 322.12 forint.
Analysts reckon that base rate cuts exert less influence on the forint than April’s general election.
Forint may strengthen if Péter Magyar wins
Péter Virovácz of ING predicts that if Viktor Orbán retains power, the forint will weaken by 10 per cent. A Tisza Party victory, by contrast, could strengthen it by the same margin.
This probably doesn’t belong here, but only at first glance.
The CEO of the largest American investment bank JPMorgan Jamie Dimon drew a parallel between the current fierce competition in the financial market and what happened shortly before the global crisis of 2008. He said this in a speech to investors, Bloomberg reports.
Dimon emphasized that JPMorgan has no intention of sacrificing caution for short-term gains: the bank is not willing to make risky loans to boost net interest income, despite the intense competition. At the same time, he sees that many market participants in pursuit of profit “do stupid things”.
The banker noted that during any credit cycle there are “surprises”, and at the moment such a surprise could be the impact of artificial intelligence on the software industry.
Bloomberg recalls that a number of investors have already announced their exit from the securities of technology companies amid AI giants’ plans to increase capital expenditures. According to Dimon, shares of financial companies have also suffered as a result of the AI races.
In this context, it’s also interesting that Charles Nenner, CEO of the Charles Nenner Research Center, recently warned that many banks in the US already have large losses on their books, which they are still able to conceal. In his opinion, however, they won’t be able to keep this up for long.
I can’t say what the situation is like in Hungary.
If what the head of JP Morgan writes comes to pass, then the US will have to dig very deep into its empty pockets to help Hungary. The consequence will be that Hungary will then be more or less left to fend for itself, because the rich countries of Europe will turn away from Hungary.
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