At its 25 March monetary policy meeting, the Central Bank decided to cut the base rate by 10 basis points from 2.70% to 2.60%. The decision met market expectations. As a result, the interest rate now sits at the lowest level on record. This marks the twentieth consecutive meeting in which the Bank decided to cut the base rate in order to boost the economy. The Central Bank justified the reduction in the base rate given, “the low inflation environment, subdued inflationary pressures over the medium term and a degree of spare capacity in the economy.” As for price developments, the Monetary Council expects inflation to remain below the 3.0% inflation target rate in 2014, while it believes inflation will move in line with the target rate in 2015. The Central Bank stated that it expects the weakening of the exchange rate in recent months and a likely gradual increase in capacity utilization to contribute to a rise in the general price level. However, it expects only moderate wage growth and a disinflationary impact from the domestic real economy. FocusEconomics Consensus Forecast panelists see the base rate at 3.80% by the end of 2014. For 2015, the panel expects the base rate to remain stable at 3.80%.
Hungary Monetary Policy
Central Bank continues to reduce base rate
March 25, 2014
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Hungary Monetary Policy Chart
Note: Central Bank base rate in %.
Source: Hungarian Central Bank (MNB).
Hungary Economic News
October 11, 2016
In September, consumer prices rose 0.2% from the previous month, contrasting August’s 0.4% decrease.
October 7, 2016
According to preliminary data released by the Statistical Institute (KSH) on 7 October, industrial output in August rose a working-day adjusted 3.5% from the same month last year, rebounding from July’s 0.1% decrease and marking a four-month high. On a monthly basis, industrial production increased a seasonally- and working-day adjusted 1.6% in August, which followed July’s 0.3% decrease.
September 26, 2016
The GKI economic sentiment indicator advanced slightly from August’s minus 3.9 points, which was the lowest reading in over two years, to the still-low level of minus 3.6 points in September.
Hungary: Central Bank leaves base rate at 0.90%, continues easing monetary conditions by capping main deposit facility
September 20, 2016
The Central Bank of Hungary (NBH) held all rates constant at its 20 September monetary policy meeting, but continued easing monetary policy conditions by using unconventional monetary policy instruments.
September 9, 2016
In August, consumer prices fell 0.4% over the previous month, coming in below July’s softer 0.2% decrease.