Dovish stance of Hungary’s MPC missing the bigger picture

The statement accompanying today’s MPC meeting in Hungary continued to strike a dovish tone which, given the recent run of weak inflation data, isn’t a surprise. But the softness of inflation has been due to transitory factors that will unwind over the course of this year. And, stepping back, we’re now at a stage of the economic cycle when the MPC should be shifting away from its current extremely accommodative policy stance. In our view, there’s a growing risk that policy is kept too loose for too long.