Magyar Nemzeti Bank

May 27, 2015

The Hungarian central bank base rate was cut in a third straight month on Tuesday, and like reductions in March and April, the size of the move was 15 basis points.  The new level becomes 1.65%, and a statement explaining the latest action retains an easing policy bias.

if the assumptions underlying the Bank’s projections hold, the inflation outlook and the cyclical position of the economy point in the direction of a reduction in the policy rate and loose monetary conditions for an extended period. Cautious easing of the policy rate may continue as long as it supports the achievement of the medium-term inflation target. 

There is a degree of unused capacity in the economy and inflationary pressures are likely to remain moderate for a sustained period.  The real economy is likely to have a disinflationary impact at the policy horizon and the negative output gap is expected to close only gradually. 

The reduction in March had been the first since July 2014.  From August 2012 through July 2014, the base rate was reduced at each monthly meeting, falling from 7% to 2.1%.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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