National Bank of Hungary leaves base rate on hold

Rate-setters of the National Bank of Hungary left the base rate unchanged at 0.90 percent and the central bank O/N deposit rate at -0.05 percent at a regular meeting on Tuesday.

The Monetary Council has not changed the base rate since May 2016, though it has tweaked monetary policy on a quarterly basis, coinciding with the publication of the central bank’s Inflation Report.

The NBH will publish its latest Inflation Report on Thursday, but it released the main forecasts from the report on Tuesday.

The National Bank of Hungary raised the forecast for 2020 headline inflation to 3.5 percent from 3.4 percent in the previous Inflation Report. But it left the forecasts for 2019 and 2021 unchanged, both at 3.3 percent.

In a statement released after the policy meeting, the Council said CPI “is expected to rise further temporarily until January 2020, mainly reflecting the base effect of fuel prices and the increase in food prices”.

“Following a gradual decline, inflation is likely to stabilise at the 3 percent inflation target in the second half of the forecast horizon,” the rate-setters added.

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The central bank’s measure of core inflation excluding indirect tax effects — a bellwether indicator of underlying inflation — “is likely to decrease from the first quarter of 2020”, the Council said.

The Council noted that inflation expectations “remain anchored”.

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Source: mti