Policy makers keep base rate, O/N deposit rate on hold

Hungarian rate-setters kept the central bank base rate on hold at 0.90 percent and the O/N deposit rate at -0.05 percent at a monthly policy meeting on Tuesday.

The Council has left the rates unchanged since a policy meeting last March; however, they have tweaked monetary policy on a quarterly basis — coinciding with the publication of the central bank’s Inflation Report — by adjusting the amount of liquidity to be crowded out from central bank instruments that pay the base rate.

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

It lowered the forecast for 2020 inflation to 2.6 percent-2.8 percent from 3.5 percent in the previous Inflation Report released in December.

The central bank explained that the forecast is a range because it is based on two equally weighted scenarios rather than a preferential baseline scenario due to the uncertain economic prospects resulting from the coronavirus pandemic.