How will Hungary’s National Bank tighten policy?

We’ve argued for a long time that the monetary stance of the Hungarian National Bank (MNB) is far too accommodative, and it finally appears that tightening is on the horizon. The complex nature of the Hungarian monetary framework, though, means that the first move to tighten policy could come via the backdoor, through a reduction in the MNB’s stock of outstanding FX swaps.

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