Magyar Nemzeti Bank Sends Same Message as Last month

November 25, 2014

A statement released after Hungary’s latest monetary policy meeting conveyed the view that the 2.1% key interest rate will be maintained for considerable time further.

The negative output gap is expected to close gradually at the monetary policy horizon. Looking ahead, therefore, the disinflationary impact of the real economy is likely to diminish and, with current monetary conditions maintained, inflation is likely to move into line with the target over the medium term. The Council judges that, based on available information, the current level of the central bank base rate is consistent with the medium-term achievement of price stability and a corresponding degree of support to the real economy. If the assumptions underlying the Bank’s projections hold, achieving the medium-term inflation target points in the direction of maintaining current loose monetary conditions for an extended period.

CPI inflation is marginally below zero at the moment, and Hungary’s central bank rate level was achieved after 490 basis points of easing between August 2012 and July 2014.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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