Magyar Nemzeti Keeps Loose Stance but Doesn’t Augment Such

August 23, 2016

Hungary’s Base Rate has been 0.90% since three consecutive reductions of 15 basis points earlier this year in March, April and May. From August 2012 to July 2014 the rate had been slashed to 2.1% from 7.0%, and its was redued by a further 75 basis points between March and July of 2015. Today’s statement doesn’t hint that further relief will be necessary. The output gap will be diminishing, GDP growth has strengthened, and inflation is expected to approach the 3% target in the first half of 2018. But slack remains for now, and that has kept inflation persistently under target. However, the statement concludes that achievement of the medium-term inflation target hinges on keeping the present interest rate level and associated loose monetary conditions for “an extended period of time.”

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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