Hungarian central bank rate-setters decided to leave the base rate on hold at 13 percent, but voted to cut the central bank’s O/N collateralised loan rate by 100 basis points to 19.50 percent at a monthly policy meeting on Tuesday.
The Council left the O/N deposit rate, at the bottom of the “interest rate corridor“, at 12.50 percent. In a statement released after the meeting, the Council said its members had also decided to cut the interest rate on the central bank’s one-day quick deposits offered at daily tenders by 100bp. It also decided to reduce the interest paid on optional reserves by 100bp from 18 percent to 17 percent. The Council said it was necessary to maintain the current level of the base rate over a prolonged period in order to ensure “that inflation expectations are anchored and the inflation target is achieved in a sustainable manner”.
At a press conference, National Bank of Hungary governor György Matolcsy said the measure marked the start of the “normalisation” of monetary policy. He said the inflationary peak was being followed by disinflation. Matolcsy said that after the twin deficits that had characterised the past two years, the stability of Hungary’s financial markets had improved significantly as a result of both external and internal factors. He added, at the same time, that it was likely there would be no talk of lowering the base interest rate for a longer period of time.
Budget deficit close to HUF 2,710 bn in April, ministry confirms
Hungary’s cash flow-based budget balance reached 2,709.7 billion forints (EUR 7.2bn) at the end of April, the finance ministry confirmed in a detailed release of data on Tuesday. The deficit widened from 2,089.7 billion at the end of March. The central budget deficit reached 2,671.6 billion forints at the end of April and the social security funds were 77.4 billion in the red. Separate state funds had a 39.3 billion forint surplus. The ministry noted that expenditures related to the regulated utilities price scheme for households came to 848.5 billion forints by the end of April.
Expenditures on home subsidies reached 283.3 billion forints in January-April, climbing by 106.4 billion forints from the base period on higher payouts for home renovations, the ministry said. Spending on state assets grew as building investments and transport infrastructure developments “advanced by a large degree”, it added. “The government’s primary goal is to protect families as well as preserve workplaces and the value of pensions, even amid the drawn out war and the energy crisis caused by the resulting sanctions,” the ministry said. With a nearly quadrupled allocation to keep the regulated utilities price scheme in place in the 2023 budget, the government continues to ensure families, businesses and local councils the “biggest utilities support in Europe”, it added.
“The government is improving balance indicators in the perilous international environment, too, reducing the fiscal deficit and state debt,” the ministry said. The full-year deficit target is 3,400.2 billion forints. The deficit reached 4,753.4 billion forints in 2022.
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1 Comment
We’re the highest in the EU by quite a margin – it’s COVID! It’s the war! It’s Soros! It’s the Liberal Elite!
https://www.ecb.europa.eu/stats/financial_markets_and_interest_rates/long_term_interest_rates/html/index.en.html
Since the rest of the EU appears to be doing OK – couldn’t possibly be our Politicians, could it? After how many years in power?