NBH governor Jarai: CPI to be top concern, but rate hike not only option.

NBH governor Jarai: CPI to be top concern, but rate hike not only option. CPI inflation is expected to be the “number one” concern at the upcoming meeting of the Monetary Council on Monday (Nov 20), NBH governor Zsigmond Jarai said in Frankfurt as quoted by Reuters. We recall that inflation accelerated to slightly higher-than-expected 6.3% y/y in October from 5.9% in September. However, Jarai stressed that he was not saying that base rate hike was the only option, most likely referring to the recent HUF strengthening as the forin reached yet another 8-month high on Thursday. Overall we see the tone of the governor much more balanced than earlier rather “hawkish” statements, which increases the chances for “on hold” decision on Monday. As recalled Jarai along with his deputy Henrik Auth were the only 2 members who voted for a 50bps hike at the October’s sitting. On a different note, the governor once again criticised the updated convergence programme saying that it was difficult to see reforms in it. He added that the NBH was “sceptical” that the country would be able to meet the Maastricht criteria by 2011.