Hungary and Poland Monetary Policy Decisions: No Changes

August 24, 2010

Yesterday the Magyar Nemzeti Bank announced no change in Hungary’s central bank Base Rate of 5.25%.  Fourteen reductions totaling 625 basis points between November 2008 and April 2010 had been implemented earlier.  There have been no hikes yet, but some informal consideration of such appears to have been entertained, since a new statement from officials indicates rising inflation risks due to a softer forint, higher commodity prices, and economic recovery.  Actual CPI inflation of 4.0% as of July was down from 5.9% in March.

Today, the Narodowy Bank Polski likewise left its seven-day reference rate unchanged at 3.5%, which was the result that analysts expected.  Six rate cuts from November 2008 to June 2009 cumulated to 250 basis points from a prior 6.0% peak.  CPI inflation slowed to a sub-target 2.0% as of July from 2.9% in February, and wages have been more contained than expected.  Retail sales and industrial production have lost some momentum, pointing to somewhat slower growth in 2H10.  The 11.6% jobless rate is still cresting.  A statement released today by officials can be read by clicking here.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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