Hungarian Parliament building

Hungary Monetary Policy September 2023

Hungary: MNB once again narrows interest rate corridor in September

At its 26 September meeting, the Monetary Council of the Hungarian National Bank (MNB) left its base rate unchanged at 13.00% for the twelfth consecutive meeting. However, the Bank cut the overnight collateralized lending rate to 14.00% from 16.50%, while it reduced the overnight deposit rate to 12.00% from 12.50%, thereby narrowing the interest rate corridor for the sixth consecutive meeting.

The Bank said that the decision to further narrow the corridor was the last step in the process of normalizing the rate environment, as “the interest rate corridor became symmetric, with a band of +/- 100 basis points around the base rate”. It therefore stated that monetary policy had entered a new phase, with base-rate adjustments now the main monetary policy tool. The Bank reiterated that it would continue to reinforce monetary policy transmission by absorbing interbank forint liquidity.

The Bank also said that it would keep the base rate at its current level for a protracted period, as it deemed the current tight monetary policy stance conducive to price stability. This, together with subdued activity and a favorable base effect, should bring inflation down to single digits by the end of this year and within the Bank’s target range of 3.0% plus or minus one percentage point by early 2025. The headline inflation rate decelerated to 16.4% in August from 17.6% in July, and the Bank expects it to reach 7.0-8.0% by year-end.

Looking ahead, the Bank sees the current rate as adequate to manage inflation risks. The MNB expects inflation to slow at an accelerating pace in the coming months. That said, the Bank reiterated that it would keep monetary conditions tight ahead.

The next monetary policy meeting is scheduled for 24 October.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest