Hungary’s Accommodative Monetary Policy Settings Left Unchanged

May 22, 2018

The monetary council at Magyar Nemzeti Bank left its base rate at 0.90%, the level since a cut in May 2016 and its overnight deposit rate at negative 0.15%, its level since a reduction last September. Quantitative monetary policies were also not changed. In a released statement, officials observed that inflation is still below the 3% medium-term target, which is observed within a plus-or-minus 1% range of tolerance. The council expects that this target will be met on a sustainable basis by the middle of next year, projects 4+% growth this year, and perceives Hungarian output to now be close to its potential level. The bank’s guidance regarding likely forward policy decisions was not modified: “In the Council’s assessment, maintaining the base rate and the loose monetary conditions at both the short and long ends for an extended period is necessary to achieve the inflation target in a sustainable manner. In line with the Council’s forward guidance, the current set of instruments contributes efficiently to the maintenance of the loose monetary conditions over a prolonged period and to an improvement in financial stability.”

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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