Hungarian Parliament building

Hungary Monetary Policy October 2020

Hungary: MNB stands pat in October

At its meeting on 20 October, 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 it held all other instruments steady.

The MNB’s decision to keep the monetary setting unchanged again reflected an attempt to sustain the economic recovery while keeping inflation in check. The Bank confirmed that the economy strengthened in Q3 following the sharp contraction registered in Q2. However, a sustained rise in coronavirus cases and an “exceptionally large degree of uncertainty” is weighing on the pace of recovery. On the price front, both headline and core inflation moderated in September, 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 persistent large output gaps.

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 effects stemming from the pandemic persist, 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 17 November.

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