Hungary keeps rates steady: Relief or warning sign for the economy?

The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base rate unchanged at 6.50pc at a monthly policy meeting on Tuesday.

The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank’s symmetric interest rate corridor.

In a statement released after the meeting, the Council said the decision to keep the base rate on hold was taken “in line with the stability-oriented approach”. The Council affirmed its commitment to achieving the inflation target in a sustainable manner and said maintaining tight monetary conditions was warranted.

“Restrictive monetary policy contributes to the maintenance of financial market stability, the anchoring of inflation expectations consistently with the central bank target and, as a result, to the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates,” the Council added.

“A careful and patient approach to monetary policy remains necessary due to risks to the inflation environment as well as trade policy and geopolitical tensions,” the policy makers said.