Macro Newsletter
Domestic News
• Hungary's GDP showed no growth in the first quarter of 2025 compared to the same period last year, falling significantly short of market expectations. The economy’s performance was weighed down by weak industrial and construction activity, while the services sector provided some support.
• In April, the National Bank of Hungary kept its base interest rate steady at 6.50% for the seventh consecutive meeting, maintaining the highest rate in the European Union, in line with market forecasts The central bank highlighted that U S tariffs and potential retaliatory measures by other major economies have created an uncertain global macroeconomic environment, justifying the decision to hold rates. Policymakers also pointed out that while tariffs and a weaker forint against the euro may increase inflationary pressures, falling global energy prices are expected to reduce cost burdens for domestic companies
• Hungary’s annual inflation rate eased to 4.7% in March 2025, down from a 15-month high of 5.6% in February and below market expectations of 5%. The decline was driven by slower price growth in services (7 5% vs 9 2%) and food (7% vs 7 1%) Meanwhile, core inflation which excludes volatile items such as food and energy fell to 5.7% in March, down from 6.2% in February, the highest level in over a year.
Eurozone
• On April 17, the European Central Bank cut all three of its key interest rates by 25 basis points, bringing the main refinancing rate to 2 40%, the deposit rate to 2 25%, and the marginal lending facility to 2.65%, in line with market expectations. The move reflects the ECB’s growing confidence that inflation is sustainably converging toward its 2% target. Both headline and core inflation have continued to decline, with a notable slowdown in services inflation Wage growth is showing signs of moderation, and many firms are absorbing cost pressures rather than passing them on to consumers. Nonetheless, downside risks to the Euro Area outlook persist, particularly due to escalating global trade tensions, which are dampening business sentiment and tightening financial conditions.
• The annual inflation rate in the Eurozone eased to 2 2% in March 2025, down from 2.3% in February, matching the preliminary estimate. Core inflation which excludes volatile components such as energy, food, alcohol, and tobacco also declined, falling to 2.4% from 2.6%, marking its lowest level since October 2021.
• Meanwhile, Germany’s Ifo Business Climate Index rose slightly to 86.9 in April 2025 from 86 7 in March, reaching its highest level since July 2024 and surpassing expectations for a weaker reading. The modest improvement was underpinned by government initiatives to ramp up public investment in infrastructure, defense, and private-sector support, aimed at stimulating growth amid renewed tariff threats from the United States
Eurozone main refinancing operations rate, %
• The annual inflation rate in the United States slowed for a second consecutive month, easing to 2.4% in March 2025 from 2.8% in February its lowest level since September and below the expected 2.6%. Core inflation, which excludes food and energy prices, also cooled to 2.8%, the lowest since March 2021 and undercutting forecasts of 3%. On a monthly basis, core CPI rose by just 0 1%, falling short of the anticipated 0 3% increase.
• At the same time, the U.S. labour market showed signs of softening, with the unemployment rate rising to 4.2% in March its highest level since November and slightly above the market consensus of 4.1%.
• Meanwhile, the yield on the 10-year U S Treasury note remained stable at around 4.17% on Wednesday, marking a three-week low. Investors are closely monitoring upcoming economic data for early signals on the potential economic fallout from recently announced tariff measures.
Source: Trading Economics
US 10 year Bond evolution, %