No Change in Hungarian Monetary Policy at Latest Review

February 26, 2019

Magyar Nemzeti Bank’s base rate has been at 0.90% since a 15-basis point cut in May 2016, and Hungary’s overnight deposit rate has been negative 0.15% since a a 10-basis point reduction in September 2017. A statement released today after the latest review speaks of eventual normalization:

The Monetary Council is prepared for the gradual and cautious normalisation of monetary policy, which will begin depending on persistent inflationary developments. Core inflation excluding indirect tax effects is likely to continue to rise in the coming quarters, which the Council will assess in terms of the sustainable achievement of the inflation target.

On the other hand, the statement also acknowledges that a weaker global environment may impact the timing of normalization in Hungary.

Due to the weakening outlook for global, and particularly euro area, activity, the world’s leading central banks have taken a more cautious approach. Based on market expectations about the timing of interest rate increases by the world’s leading central banks, loose monetary conditions may remain for a longer period of time than earlier expected.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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