Hungary: MNB holds rates steady in November meeting
On 19 November, the Monetary Council of the Hungarian National Bank (MNB) held the base rate steady at a historical low of 0.90%, and kept all other existing instruments unchanged. The decision was in line with market expectations. After its one-time hike of the overnight deposit rate in March, the MNB has since stayed put, while the world’s major central banks have loosened monetary policy amid slowing global growth dynamics.
The decision to hold rates largely reflected cooling European economic activity, which has kept a lid on inflationary pressures. Inflation rose to 2.9% in October from 2.8% in September, amid buoyant domestic activity, and is expected to rise further by the end of the year owing to the base effects of the drop in fuel costs last year. Nevertheless, the Bank noted that it sees inflation falling and stabilizing at its 3.0% target in 2020. Notably, external disinflationary effects and a moderation in wage growth are expected to put downward pressure on prices.
Looking ahead, the MNB maintained its accommodative stance from the last meeting as downside risks to inflation have strengthened further, reflecting the slowdown in European activity and loose global monetary policy. Nevertheless, the Bank will maintain a cautious approach and future developments affecting the price outlook will decide the need of any further measures.
The next meeting is scheduled for 15 December.