Interest Rate in Hungary
Hungary - Interest Rate
MNB stays put ahead of June’s review
On 28 May, the Monetary Council of the Hungarian National Bank (MNB) left the base rate at its current record low of 0.90% and held steady all other existing instruments. Although a number of analysts argued that more tightening was necessary on the heels of the MNB’s one-time adjustment in March, the decision to hold off was widely expected by financial markets.
Higher inflation (April: 3.9%) did not warrant a response by the MNB as changes to monetary policy are typically tied to its inflation forecasts—which are expected to be revised in June. That said, policymakers acknowledged the by-now familiar contrast; domestic demand remains a force to be reckoned with, while external demand has continued to retreat. Taken together, policymakers currently expect inflation to hover near the MNB’s midpoint target of 3.0% over the short-term.
Despite the recent weakening of the forint, policymakers remained dovish. Moreover, although the MNB is expected to normalize its monetary policy over the medium-term, it clarified that it would strike a balance between the European Central Bank’s current holding pattern and the further unwinding of unconventional instruments. Most significantly, it is expected to adjust the pace of any near-term tightening to the path of inflation.
Looking ahead to the MNB’s next announcement on 25 June, analysts at Goldman Sachs noted:
“We expect the last inflation print before the June meeting to show both headline and tax-adjusted core inflation steady in May. This would imply a significant upward surprise to the MNB’s March expectations for the headline figure, but it would be consistent with the tax-adjusted core forecast. Moreover, while the MNB has stressed material risks to inflation in both directions, the likelihood of the downside risks materialising has decreased, in our view. Taken together, with (i) headline inflation rising above the MNB’s March forecast; (ii) a material weakening in the Forint following the March meeting; and (iii) more positive news on external growth conditions, we think the MNB is likely to introduce further moderate tightening in monetary conditions in June.”
Hungary Interest Rate Forecast
A majority of FocusEconomics analysts do not currently expect a first rate hike until next year, however. As such, they see the base rate ending 2019 at 1.01%. For 2020, the panel sees the base rate ending the year at 1.43%.
Hungary - Interest Rate Data
|Policy Interest Rate (%)||3.00||2.10||1.35||0.90||0.90|
5 years of economic forecasts for more than 30 economic indicators.
Hungary Interest Rate Chart
Source: National Bank of Hungary.
|Bond Yield||2.82||0.0 %||Jun 14|
|Exchange Rate||287.6||-0.68 %||Jun 14|
|Stock Market||40,588||0.04 %||Jun 14|
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May 31, 2019
First-quarter growth clocked in at the fastest pace in nearly two decades, according to Hungary’s Statistical Office on 31 May.
May 29, 2019
On 28 May, the Monetary Council of the Hungarian National Bank (MNB) left the base rate at its current record low of 0.90% and held steady all other existing instruments.
May 27, 2019
The GKI economic sentiment index, a composite indicator, rose for the first time in five months in May, edging up to 4.3 points from 2.9 points in April.
May 15, 2019
The Hungarian economy continued to fire on all cylinders in the first quarter.
May 14, 2019
Industrial output increased a working-day-adjusted 8.0% year-on-year in March, outpacing a 6.0% increase in February and marking the strongest result since October 2017.