Hungary: Central Bank reduces base rate by 20 basis points
November 26, 2013
At its 27 November monetary policy meeting, the Central Bank announced that it would cut the base rate by 20 basis points from 3.40% to 3.20%. The decision was widely expected by the markets. This marks the sixteenth consecutive meeting in which the Bank has decided to cut its base rate in order to stimulate the economy. The Central Bank said that the pace of economic growth is expected to pick-up next year. However, the Monetary Council expects, "external economic activity to strengthen gradually and weak domestic demand conditions to persist." Regarding price developments, the Council pointed out that inflationary pressures are expected to remain subdued, "over a sustained period." As a consequence, the Bank's decision to cut its base rate is in line with meeting the inflation target of 3.0% in the medium term. FocusEconomics Consensus Forecast panelists see the base rate at 4.49% by the end of this year. For next year, the panel expects the rate to end the year at 4.67%.
Author: Dirina Mançellari, Senior Economist