Hungarian Parliament building

Hungary Monetary Policy October 2022

Hungary: MNB stands pat in October

At its 25 October meeting, the Monetary Council of the Hungarian National Bank (MNB) left its base rate unchanged at 13.00%, following 17 consecutive increases. 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 halted its tightening cycle as it deemed that keeping interest rates stable for a prolonged period of time would bring inflation within the Bank’s target range of 3.0% plus or minus one percentage point. That said, headline inflation accelerated to 20.1% in September from 15.6% in August, moving further above the Bank’s target band. The MNB expects inflation to increase further in the coming months and then decline gradually from 2023 onwards.

Looking ahead, the Bank sees risks to inflation as symmetrical, with upside risks stemming from persistently high commodity and energy prices and second-round effects, and downside risks posed by a global economic slowdown and lower energy and commodity prices. The Bank announced that it will keep the current monetary conditions for a prolonged period until “the achievement of the price stability objective”, while it also stated that it will “continue to use the instruments introduced in mid-October as long as it is warranted by the maintenance of market stability”.

The next monetary policy meeting is scheduled for 22 November.

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