National Bank of Hungary keeps key rate on hold

Budapest, January 26 (MTI) – Hungarian rate setters kept the base rate on hold at 1.35 percent on Tuesday.

The decision was in line with the expectations of analysts.

The Monetary Council has kept the base rate on hold since signalling an end to an easing cycle at a policy meeting in July 2015.

In a statement released shortly after the rate-setting meeting the Council said the annual inflation rate increased, while core inflation was unchanged in December 2015. Measures of underlying inflation continue to indicate moderate inflationary pressures and with a marked fall in oil prices, inflation may be lower over the short term than earlier expected. Inflation is expected to remain below the 3 percent target over the forecast period, and is only likely to approach it by the end of the forecast horizon.

If the assumptions underlying the central bank’s projections hold, the current level of the base rate and maintaining loose monetary conditions for an extended period, over the entire forecast horizon, are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy.

In the third quarter of 2015 economic growth continued at a weaker rate than in previous quarters. The decline in agricultural production and the moderation in industrial production dynamics were the main factors contributing to the deceleration, the Council said.