Hungary central bank leaves rates steady as inflation spike looms

The National Bank of Hungary (NBH) left interest rates unchanged on Tuesday, as widely expected, before an expected rise in inflation.

The bank, which had pledged maintain price stability during the third wave of the coronavirus pandemic, considers the rise temporary but has said it would closely monitor for any possible second-round effects.

The NBH left its base rate at 0.6% and the overnight deposit rate at -0.05%, in line with the unanimous forecast of economists in a Reuters poll. At 1201 GMT, the forint traded at 362.65 versus the euro, unchanged from levels just before the announcement.

The overwhelming majority of economists also expect the NBH to leave its one-week deposit rate steady at 0.75% — a level where it has stayed since September’s 15-basis-point hike — at least through to the end of the third quarter.

“There is no consideration of (quantitative easing) tapering or rate hikes at this time,” said economist Tatha Ghose at Commerzbank, adding that the bank’s current policy stance was widely considered to be adequate.