Hungary: Central Bank maintains current stance in line with expectations
June 26, 2012
At its latest meeting on 26 June, the Central Bank left the base rate unchanged at 7.00%. The vote was expected by most market analysts following on similar decision taken since December 2011, when the Bank announced a 50 basis-point increase. The Central Bank noted that growth prospects have deteriorated amid weakening demand both home and abroad. Austerity measures are likely to become a drag on domestic demand, while the slowdown in Hungary's major trading partners bodes ill for a rebound in exports. Regarding inflation, the Bank stated that although inflationary pressures from the real economy remain moderate, the increases in VAT and excise duties in early 2012 as well as the measures announced as part of the Structural Reform Programme continue to keep inflation above target. However, monetary authorities highlighted that the upward pressure of taxes on inflation is likely to be only temporary.