Hungary Monetary Policy August 2016


Hungary: Central Bank leaves base rate at 0.90% in August

The Central Bank of Hungary (NBH) left its base rate unchanged at a record low of 0.90% at its 23 August monetary policy meeting, in line with market expectations. Similarly, the NBH kept the overnight collateralized lending rate at 1.15% and the overnight deposit rate at minus 0.05%. While the NBH ended a prolonged rate-cutting cycle in May and has held the base rate constant since, the Bank continued to ease monetary conditions thereafter using unconventional policy measures. Particularly, the NBH unveiled several steps in July that aim to push funds out of the benchmark facility into the private sector and government securities in order to reduce government bond yields and increase lending to the private sector.

At its August meeting, the Bank highlighted that despite GDP growth picking up in Q2 following Q1’s slump, the Hungarian economy was still performing below potential, thus keeping inflationary pressures muted. Against this backdrop, inflation remains well below the Bank’s 3.0% target—in fact consumer prices fell in annual terms in July—and the NBH does not expect inflation to rise to the target until the first half of 2018. In the Bank’s view, a gradual narrowing of the output gap will be supported by fiscal and monetary stimulus—including the Bank’s extended Funding for Growth Scheme, the government’s efforts to boost housing construction and accelerated absorption of EU funds—thereby bringing inflation up. As for its future monetary policy decisions, the NBH noted that the outlook for inflation and the real economy pointed to keeping the base rate at 0.90% and promised to maintain its loose monetary policy for an “extended period”. The next monetary policy meeting will be held on 20 September.

FocusEconomics Consensus Forecast panelists see the base rate ending 2016 at 0.86%. For 2017, the panel sees the base rate ending the year at 0.92%.

Sample Report

Looking for forecasts related to Monetary Policy in Hungary? Download a sample report now.


Hungary Monetary Policy Chart

Hungary Monetary Policy August 2016 0

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

Hungary Economic News

  • Hungary: Economy expands robustly in Q1

    May 16, 2017

    The Hungarian economy started the year on a strong footing.

    Read more

  • Hungary: Inflation moderates in April

    May 12, 2017

    In April, consumer prices increased 0.4%, coming in above the flat reading observed in March.

    Read more

  • Hungary: Industrial output surges in March

    May 5, 2017

    According to preliminary data released by the Statistical Institute (KSH) on 5 May, industrial output in March rose a working-day adjusted 9.4%, which followed the already-strong 7.1% expansion observed in February and marked the best print since October 2015. On a monthly basis, industrial production slowed from a revised seasonally- and working-day adjusted 3.1% expansion in February to a soft 0.4% increase in March.

    Read more

  • Hungary: Central Bank stays put in April

    April 25, 2017

    At its 25 April monetary policy meeting, the Monetary Council of the Hungarian National Bank (MNB) met market expectations by leaving the base rate unchanged at its current record low of 0.90% and by keeping all remaining monetary policy instruments on hold.

    Read more

  • Hungary: Inflation moderates in March

    April 11, 2017

    In March, Hungarian consumer prices remained unchanged from the previous month, down from February’s 0.4% month-on-month increase.

    Read more

More news

Search form