Hungarian Central Bank Base Rate Held at 6.0%

June 20, 2011

For a fifth straight month, officials at the Magyar Nemzeti Bank left their Base Rate at 6.0%.  Three prior increases of 25 basis points were implemented last November, December and January.  The rate was reduced previous to that some fourteen times from a cyclical peak of 11.5% to a low of 5.25% between November 2008 and April 2010.  A statement from the central bank today makes the same points as last month’s statement.  Inflation has been lifted by commodity cost push shocks but should settle back because GDP will be below its potential full-employment level over the period to end-2012.  By then, the CPI should be around its 3% target compared to 3.9% currently.  There are both upside and downside risks to the CPI forecast. 

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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