Hungarian monetary policy makers keep base rate on hold

The Monetary Council of the National Bank of Hungary (NBH) decided to keep the central bank O/N deposit rate at -0.05 percent and the base rate at 0.90 percent at a monthly policy meeting on Tuesday. The decision was in line with expectations.

In a statement released after the meeting, the council said risks to inflation had become asymmetric as downside risks strengthened further because of the slowdown in Europe and a loosening of monetary policy by big central banks.

Because of the base effect of a fall in fuel prices last year, headline inflation is “likely to rise again until the end of 2019, and then to stabilise at the level of the 3 percent inflation target following a gradual decline”, the council said.

Core inflation excluding indirect tax effects, a bellwether indicator of underlying inflation which rate-setters follow closely, is expected to “rise slightly” in the coming months “before decreasing to 3 percent along a lower than previously expected path, due to external disinflationary effects”, the council added.

As we wrote a few days ago, Hungary is today among the fastest growing economies in the European Union, thanks to well-performing companies, the work of Hungarian employees and effective economic policy, Finance Minister Mihály Varga said.

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Source: mti