Hungary: Central Bank cuts base rate further
December 17, 2013
At its 17 December monetary policy meeting, the Central Bank decided to cut the base rate by 20 basis points, from 3.20% to 3.00%. The decision was widely expected by the market. This marks the seventeenth consecutive meeting in which the Bank announced that it would cut the base rate in order to stimulate the economy.
According to the Bank, the economy is expected to gain momentum in 2014. It stated that stronger external demand and, "the establishment of new production capacity in the automobile industry," would support growth. Regarding price developments, the Bank projects subdued inflationary pressures in the medium term. In addition, "there remains a significant degree of unused capacity in the economy," and thus, the Monetary Council decided to cut the base rate further.
FocusEconomics Consensus Forecast panelists see the base rate at 3.98% by the end of 2014. For 2015, the panel expects the base rate also at 3.98%.
Author: Dirina Mançellari, Senior Economist