Hungary’s Magyar Nemzeti Bank Latest Policy Decisions
November 22, 2016
The monthly Monetary Council meeting in November result in decisions to leave the central bank Base Rate and deposit rate flat at 0.90% and -0.05%, respectively, and to cut the overnight collateralized lending rate by 15 basis points to 0.90% and the one-week collateralized lending rate 10 bps to 0.90% as well.
The Base Rate had been reduced incrementally between August 2012 and July 2014 from 7.0% to 2.1%, then cut again by 15 basis points each at five straight meetings from March to July of 2015 and, most recently, by 15 bps in March, April and May of this year to the current level of 0.90%. At the previous meeting on October 25, officials had reduced the overnight lending rate by 10 basis points. Today’s actions constitute a marginal loosening of monetary conditions and shrink the overnight interest rate corridor, which has been a goal.
A released statement observes historically low expected inflation, some continuing excess capacity in Hungary’s economy, persistent sub-target inflation, but a gradual decline in disinflationary pressure. The Council projects that inflation will be modest for “an extended period” and notes that GDP last quarter was only 2.0% greater than a year earlier but that uncertainty in the global financial market environment warrants a cautious approach to monetary easing. The forint is essentially unchanged on balance from its level at the time of October’s meeting.
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Tags: Hungarian monetary policy
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