Hungary Monetary Policy


Central Bank leaves rates unchanged as expected

At its 24 April monetary policy meeting, the Central Bank left the base rate unchanged at 7.00%, which was expected by most market analysts. The Bank last changed interest rates in December 2011, when it announced a 50 basis-point increase. The Bank stressed that "perceptions about the Hungarian economy have deteriorated in the past month, mainly driven by global factors" and urged the government to reach an agreement with the EU and the IMF, which would "reduce the risks associated with financing the government debt and slow the pace of withdrawals of foreign funding from the domestic banking sector". Monetary authorities also stated that "high volatility of risk perceptions and recent trends in underlying inflation continue to warrant a cautious policy stance". Moreover, the Bank highlighted that it will take all the necessary actions to ensure that recent government measures aimed at reducing the fiscal deficit "do not contribute to medium-term inflationary pressures and inflation returns to levels consistent with the Bank


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