Hungary Monetary Policy November 2020


Hungary: MNB keeps monetary policy unchanged in November

November 17, 2020

At its meeting on 17 November, the Monetary Council of the Hungarian National Bank (MNB) decided to keep the base rate unchanged at the all-time low of 0.60%, and also held all other instruments steady, which was in line with market analysts’ expectations.

The MNB’s decision to hold fire represented a balancing act to sustain the economic recovery while keeping inflation in check. The economy rebounded robustly in Q3 following the pronounced contraction registered in Q2. However, the Bank expects growth to stall in Q4 as a result of the reintroduction of restrictions to contain the rise in coronavirus cases and due to a high degree of uncertainty. On the price front, both headline and core inflation moderated further in October, although the evolution of prices in the coming months will depend on the balance between upside pressures stemming from supply disruptions and downside pressures due to weak demand.

Looking ahead, the Bank maintained a moderately hawkish tone in its communiqué, as it reaffirmed that it stands ready to use appropriate instruments if inflationary pressures stemming from the pandemic strengthen, while reiterating that it considers the current monetary policy stance supportive of “price stability, the preservation of financial stability and the recovery of economic growth in a sustainable manner”.

The next monetary policy meeting is scheduled for 15 December.

FocusEconomics Consensus Forecast panelists see the base rate ending 2021 at 0.63% and 2022 at 0.77%.

Author: Massimo Bassetti, Senior Economist

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Hungary Monetary Policy Chart

Hungary Monetary Policy November 20 20

Note: Central Bank base rate in %.
Source: Hungarian National Bank (MNB).

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