Key events in EMEA and Latam next week

After a long and uneventful summer for Hungarian monetary policy, next week’s rate-setting meeting could bring some excitement. The NBH releases its new forecasts for inflation and GDP growth and while we don’t expect any significant changes here, we do think the NBH will take an initial step towards policy normalisation, signalling an upcoming change in the FX swap tenders, IRS and mortgage QE programmes. A change in forward guidance seems plausible given that the NBH Deputy Governor Marton Nagy is planning a conference call for 19 September and will be visiting London on 21 September.

In LATAM, the focus will be on Brazil’s central bank policy meeting. FX weakness has increased the prospects for a policy rate hike, from the current record-low 6.5%. In our view, however, given the unpredictable political dynamics ahead of next month’s elections, central bank officials may opt to fine-tune their guidance, adding a hawkish bias, but refraining from a rate hike just yet. A policy calibration can wait until after the elections when officials will have greater clarity about the fiscal policy outlook.