Research memo: Hungarian inflation scare
By Lars Christensen, CEO and founder, LC@mamoadvisory.com and Laurids Rising, Analyst, LR@mamoadvisory.com
Following the initiation of a quantitative easing programme in December 2017 by the Hungarian central bank (MNB) our measure of monetary conditions in Hungary, our Monetary Indicator, has continued to inch up reaching excessively easy territory. This has been driven by significant acceleration in money supply growth.
In our view, pick up in Hungarian inflation in May marks the beginning of an acceleration in inflation due to the MNB’s overly easy monetary stance.
This has been reflected in the markets over the last few months as both short and long-term bond yields have increased notably, indicating higher inflation expectations.
Our view on current Hungarian monetary conditions can be read in our research memo here.