Key events in EMEA next week

The National Bank of Hungary will put more emphasis on the pro-inflationary impact of the war than on the negative economic activity impact when it meets again next week. This will be reflected in the new staff projection as we see significant upward revisions in the 2022-23 inflation outlook. Against this backdrop, we see a hawkish 100bp hike in the base rate and in the interest rate corridor on Tuesday followed by a 50bp rise in the 1-week deposit rate on Thursday.

As an alternative scenario – especially if the Hungarian forint (HUF) strengthens further – the combination of a 50bp (base rate) and a 30bp (1-week deposit rate) hike would be realistic as well. To end the week, we are going to see the latest unemployment data, where we expect some positive correction in February after the seasonal uptick in the jobless rate in January.