Hungarian National Bank Interest Rates Left Unchanged

August 27, 2019

There was no interest rate change as anticipated at this month’s monetary policy review by the Magyar Nemzeti Bank Council. The base rate has been at 0.90% since a 15-basis point cut in May 2016. The overnight deposit rate was raised 10 basis points last march to -0.05%, reversing a similarly sized cut in September 2017 against the backdrop of higher inflation. However, the adjustment in March was then characterized as a one-off move, and today’s statement supports that initial view. Officials note that as they had expected, inflation began settling back this summer. The statement also asserts that downside risks to the longer term inflation outlook have strengthened. Note is made that monetary policies have recently been eased elsewhere and that Hungary’s accommodative stance will continue. Slower GDP growth is projected for 2020 than 2019. All in all, the direction of the next interest rate adjustment is left ambiguous.

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



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