Hungary Monetary Policy November 2022


Hungary: MNB stands pat in November

November 22, 2022

At its 22 November meeting, the Monetary Council of the Hungarian National Bank (MNB) left its base rate unchanged at 13.00% for the second consecutive meeting. Moreover, the Bank left the overnight deposit rate, the overnight collateralized lending rate and the one-week collateralized lending rate unchanged at 12.50%, 25.00% and 15.50%, respectively.

The Bank reiterated that it expects keeping interest rates stable for a prolonged period of time following an aggressive tightening cycle to bring inflation within the Bank’s target range of 3.0% plus or minus one percentage point in early 2024. That said, headline inflation accelerated to 21.1% in October from 20.1% in September, moving further above the Bank’s target band. The MNB expects inflation to decline only gradually in H1 2023 and more significantly in the second half of next year.

Looking ahead, the Bank sees risks to inflation as symmetrical, with upside risks stemming from persistently high energy prices, and downside risks posed by a global economic slowdown and lower energy and other commodity prices. The Bank announced that it would keep the current monetary conditions for a prolonged period until “the achievement of the price stability objective”.

Commenting on the release, Peter Virovacz and Frantisek Taborsky, economists at ING, stated:

“The [MNB] focuses on sustained shifts in financial market conditions, and it will use its instruments introduced in mid-October until a trend improvement in risk perceptions occurs. In our view, this means that the central bank will take its time to assess the market outcome of a possible positive end to the Rule-of-Law debate and won’t immediately react with its monetary policy set-up.”

The next monetary policy meeting is scheduled for 20 December.

FocusEconomics Consensus Forecast panelists are still assessing the latest developments and new forecasts will be released on 29 November.

Author: Massimo Bassetti, Senior Economist

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Hungary Monetary Policy Chart

Hungary Monetary Policy November 2022

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

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