Hungary Monetary Policy October 2019


Hungary: MNB keeps rates unchanged in October meeting

October 22, 2019

On 22 October, the Monetary Council of the Hungarian National Bank (MNB) kept the base rate unchanged at the historical low of 0.90% and held stable all other existing instruments. The decision was expected by the market and comes at a time when major central banks are loosening monetary policy amid slowing growth dynamics. The MNB has stayed put since the one-time hike of the overnight deposit rate in March.

The Bank held rates amid cooling inflationary pressures, reflecting the effects of the slowdown in European economic activity. Inflation dropped to 2.8% in September from 3.1% in August amid a tight labor market and strong household consumption, falling below the midpoint of the Bank’s target range of 3.0% plus or minus 1.0 percentage point. While the Bank noted that prices are expected to rise again until the end of the year due to the base effects of the decline in fuel prices last year, inflation is expected to fall, and stabilize within, the target range in 2020. Particularly, price pressures will moderate on weakening external activity, and on a moderation in wage growth.

Looking ahead, the MNB maintained its dovish message from the last meeting, pointing to external headwinds, low imported inflation and global accommodative monetary policy which have strengthened the downside risks to inflation. The Bank will, however, maintain a cautious approach and future developments in the outlook for inflation will decide the necessity of any further measures.

The next meeting is scheduled for 17 November.

FocusEconomics Consensus Forecast panelists expect the base rate to end 2020 at 1.00%. For 2021, the panel projects the base rate to end the year at 1.36%.

Author:, Economist

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Hungary Monetary Policy Chart

Hungary Monetary Policy October 2019

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

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