Hungary Monetary Policy


Central Bank cuts base rate further

At its 21 January monetary policy meeting, the Central Bank decided to cut the base rate by 15 basis points from 3.00% to 2.85%. The decision undershot market expectations of a 20 basis points cut in the base rate. As a result, the interest rate now sits at the lowest level on record. This marks the eighteenth consecutive meeting in which the Bank announced that it would cut the base rate in order to stimulate the economy. According to the Bank, output remains below potential, however, the economy is expected to continue to grow both this year and the next. In addition, the Bank expects both domestic demand and exports to grow in the coming years. Regarding price developments, the Monetary Council said that, "the Bank's measures of underlying inflation capturing the medium-term outlook indicate moderate inflationary pressures in the economy." FocusEconomics Consensus Forecast panelists see the base rate at 3.98% by the end of 2014. For 2015, the panel expects the base rate to be 3.98%.

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Hungary Monetary Policy Chart

Hungary Monetary Policy January 2013

Note: Central Bank base rate in %.
Source: Hungarian Central Bank (MNB).

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