Hungarian National Bank decided about base rate, regards price stability primary task
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.
Base rate remains
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 affirmed its commitment to achieving the inflation target in a sustainable manner and pointed to the need for a “careful and patient” approach to monetary policy amid risks to the inflation environment and trade policy and geopolitical tensions.
“Maintaining tight monetary conditions is warranted,” the policy makers said.
At a press conference after the meeting, central bank governor Mihaly Varga said inflation was slowing further in April and was expected to approach the upper end of the NBH‘s 3pc +/-1pp tolerance band in the coming months. He also said inflation risks had strengthened because of the timing and contrasting effects of tariffs announcements, while volatility on international financial markets had grown and risk aversion on emerging markets had increased.
Maintaining financial market stability and anchoring inflation expectations is of “key importance”, he said. He added that the decision to keep the base rate on hold had been taken in line with the Council’s “stability-oriented” approach. The base rate could remain at its current level “for an extended period”, he said.
Price stability primary task
Fielding questions, Varga said the NBH’s new management was committed to transparency and was in the process of “rationalising” the central bank’s operations. He added that the NBH had to focus on its primary tasks, such as achieving price stability, and didn’t need to operate foundations.
He said talks with the government on amendments to the central bank act had finished and a bill could be submitted to lawmakers.
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