A Sixth Straight Monthly Central Bank Interest Rate Cut in Hungary

March 26, 2024

The Central Bank of Hungary’s base rate has been lowered at six straight monthly policy reviews, dropping by 225 basis points in the final quarter of 2023 and but 250 bps this quarter. The peak rate of 13.0% was maintained from September 2022 to October 2023. CPI inflation in Hungary peaked at 25.7% in January 2023 and fell to 9.9% by last October. Such has decelerated sharply further to a 35-month low of 3.7% last month. Core inflation of 5.1% was a full percentage point lower than January’s level. The base rate’s total 475-basis point decline since October reverses roughly three-eighths of the increase of 12.4 percentage points between June 2021’s pandemic low of 0.6% and the aforementioned 13.0% peak reached in September 2022. A statement released by the central bank strikes a note caution regarding future rate cuts:

Risks surrounding global disinflation, volatility in international investor sentiment and the temporary rise in domestic inflation, expected in the middle of the year, warrant a careful approach to monetary policy in the coming months. Decisions on any further reductions in the base rate and their optimal pace will be made on the basis of this information, in a data-driven manner.

Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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This entry was posted on Tuesday, March 26th, 2024 at 9:16 am and is filed under Central Bank Watch, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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