Hungarian Central Bank Base Rate Kept at Record Low 1.35%

August 25, 2015

The statement released after the latest Monetary Council meeting implies that Hungary’s central bank base rate is unlikely to get changed, up or down, for an extended period.  Extensive easing began in August 2012 from a 7.0% level.  The base rate was lowered at every meeting through July 2014, at which point such stood at 2.1%.  Following an eight-month hiatus, the rate was reduced by 15-basis point increments this year in March, April, May, June and July to its current 1.35% level. Although domestic demand is expanding nicely, it will take with present policy until the end of the central bank’s forecast horizon for inflation to rise back to its 3.0% target.  Wage pressure is soft.  Core inflation will remain subdued because of subdued import prices, falling commodity prices, and continuing unused capacity despite a slowly shrinking output gap. 

Copyright 2015, Larry Greenberg.  All rates reserved.  No secondary distribution without express permission.



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