National Bank of Hungary keeps base rate at record low

Hungarian central bank rate-setters kept the base rate on hold at 0.9 percent on Tuesday.

The bank’s Monetary Council has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016. However, the rate-setters have made use of “unconventional, targeted” instruments to ease monetary policy further.

The Council also left the overnight central bank deposit rate at -0.15 percent and the overnight collateralised loan rate at 0.90 percent at the meeting on Tuesday.

In a statement released after the meeting, the Council reiterated the policy stand it took at the previous monthly rate-setting meeting in June. After that meeting, the Council suggested an adjustment to the timeframe for maintaining its loose policy compared to earlier communications. The NBH later confirmed for MTI that the Council believes the current loose monetary conditions cannot be maintained until the end of the 5 to 8-quarter policy horizon.

“In the Council’s assessment, maintaining the base rate and the loose monetary conditions is still necessary to achieve the inflation target in a sustainable manner,” the rate-setters said after the policy meeting on Tuesday.