Central Bank of Hungary

August 22, 2017

Hungary’s key central bank interest rate was slashed from 7.0% some five years ago to 0.90% after a 15-basis point reduction on May 24, 2016. That was its last change. However, other rates like the overnight lending and deposit rates were reduced further subsequently — and are now at 0.90% and -0.05%. Other unconventional monetary policy measures have also been used to maintain adequate liquidity.

The latest policy review left policy unchanged and released a statement that underscored a continuing bias toward ease.

 In the Council’s assessment, the external environment continues to pose a downside risk to inflation. The Council will stand ready to ease monetary conditions further using unconventional, targeted instruments to ensure the monetary conditions necessary to meet the inflation target in a sustainable manner.

The inflation target of 3.0% is projected to be achieved and sustained by early 2019. Consumer prices rose 2.1% over the past reported twelve months and by 2.2% on a core basis. With GDP expanding 3-4%, unused capacity continues to be absorbed gradually.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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