National Bank of Hungary keeps base rate on hold

The National Bank of Hungary’s Monetary Council decided to keep the central bank’s key rate on hold at 0.9 percent at a monthly policy meeting on Tuesday.

The 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 O/N central bank deposit rate at 0.15 percent and the O/N collateralised loan rate at 0.90 percent at the meeting on Tuesday.

In a statement released after the meeting, the Council said that “maintaining the base rate and the loose monetary conditions at both the short and long ends for an extended period is necessary to achieve the inflation target in a sustainable manner”, echoing the policy stand voiced in previous months.

However, in a slight change to its earlier statements, the Council made references to “the current set” of monetary policy instruments, rather than “the extended set”, perhaps suggesting that it has no plans to add to that set of tools.

“In line with the Council’s forward guidance, the current set of instruments contributes efficiently to the maintenance of the loose monetary conditions over a prolonged period and to an improvement in financial stability,” it said.

“The Council will closely monitor developments in monetary conditions and will ensure the persistence of loose monetary conditions over a prolonged period by using the current set of monetary policy instruments,” the policy makers added.

Source: MTI