Daily News Hungary economy

Budapest, April 26 (MTI) – Hungarian rate-setters cut the base rate by 15 basis points to 1.05 percent at a meeting on Tuesday, in line with market expectations.

The National Bank of Hungary’s Monetary Council also narrowed its interest rate corridor, a band around the base rate that prevents extreme fluctuations of interbank rates, bringing the overnight collateralised loan rate to 1.30 percent while keeping the O/N central bank deposit rate at -0.05 percent.

At the previous monthly policy meeting, the Council cut the base rate by 15 basis points, making a cut for the first time since last summer.

“Interest rate cuts will continue as long as monetary conditions become consistent with the sustainable achievement of the inflation target,” the Council said in a statement after that meeting.

In a statement released after the meeting, the Council said it decided on the 15 basis point cut to mitigate risks of second-round effects resulting in below-target inflation over a sustained period because of persistently low cost-side inflationary pressure, the slowdown in global growth and the historically low level of inflation expectations.

“The Monetary Council remains ready to use every instrument at its disposal to contain second-round inflationary effects,” the rate-setters said.

The Council noted that, if the assumptions underlying the central bank’s latest quarterly Inflation Report hold, inflation will approach the 3 percent “price stability” target on in the first half of 2018.

“In the Council’s assessment, the sustainable achievement of the inflation target points to a further slight reduction in the policy rate,” they said, adding that a “watchful approach” to monetary policy is still justified because of “uncertainty in the global financial environment”.

Source: http://mtva.hu/hu/hungary-matters

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