Hungarian central bank has decided on the base rate

Hungarian rate-setters on Tuesday left the base rate unchanged at 13 percent.

The Monetary Council also decided at its policy meeting to keep the central bank’s interest rate corridor unchanged.

The decision was in line with expectations.

In a statement released after the meeting, the Council said tight monetary conditions would be maintained over a prolonged period so as to ensure that inflation expectations are anchored and the inflation target is achieved in a sustainable manner.

The central bank will continue to focus on sustained shifts in financial market conditions, the Council said, adding that the bank would use the instruments introduced in mid-October until there was a trend improvement in risk perceptions.

The Council said it was necessary to maintain the current level of the base rate for an extended period in order “to achieve the price stability objective over the monetary policy horizon”.

It said the current level of the base rate was adequate to manage fundamental inflation risks, adding that monetary tightening was set to continue with the reduction of interbank liquidity.

The Council reviewed the central bank’s latest quarterly Inflation Report at the meeting and published the main forecasts.

The report puts average annual inflation at 14.5-14.7 percent for 2022 and at 15.0-19.5 percent for 2023.