Another Cut Implemented in Hungary’s Two-Week Repo Rate

October 30, 2013

The policy interest rate of Magyar Nemzeti Bank had been reduced by 25 basis points for twelve straight months through July 2013 and now by a further 20 basis points each in the ensuing three months.  The rate now becomes 3.40%, down from 7.0% prior to August 2012.  A statement from officials defends this progressively more accommodative monetary stance, citing

  • Significant unused plant and machinery capacity.
  • A jobless rate that exceeds Hungary’s long-term norm.
  • Weak domestic demand.
  • Lessening risks of financial instability.
  • The likelihood of continuing subdued inflation into the medium term.
  • Well-anchored inflation expectations.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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