Interest Rate in Hungary
Hungary - Interest Rate
MNB remains put in July meeting as inflation recedes
On 23 July, the Monetary Council of the Hungarian National Bank (MNB) opted to keep the base rate at its current record low of 0.90% and held stable all other existing instruments. Following a one-time hike of the overnight deposit rate in March’s meeting, the decision to hold fire was widely expected by financial markets given the dovish global backdrop and cooling global dynamics.
Cooling inflation and core inflation in June, together with a projected decline in price pressures from H2 owing to weaker activity in key trading partners, led MNB to hold fire. The Bank seems unconcerned about inflation remaining above-target amid buoyant domestic demand, and sees it gradually sliding in the second half of the year on “strengthening of external disinflationary effects” to the 3.0% target in 2020. The MNB did, however, opt to reduce the amount of liquidity made available to the banking sector through FX swaps and other monetary policy instruments, thus indicating a preference for deploying unconventional tools to address inflation risks rather than raising the policy rate.
With the global pullback from monetary tightening and increasing concerns over a protracted slowdown gripping European economic activity, the MNB maintained a dovish stance in its communiqué. Upside risks to the inflation outlook stem from overheating dynamics, a more expansionary stance by major central banks, and from the corporate bond buying program launched on 1 July. Although, a low inflation external environment will temper upward price risks. The MNB’s statement indicated that data from the second half of the year will be decisive in assessing the key inflation risks.
The next meeting is scheduled for 27 August.
A majority of FocusEconomics analysts do not currently expect a rate hike until next year. Consensus’ sees the base rate ending 2019 at 0.93%. For 2020, the panel projects the base rate to end the year at 1.28%.
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||2.35||0.0 %||Jul 31|
|Exchange Rate||294.4||-0.68 %||Jul 31|
|Stock Market||40,768||0.04 %||Jul 31|
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August 14, 2019
Economic growth decelerated to 4.9% year-on-year in the second quarter, from Q1’s 5.3% expansion, according to a preliminary estimate released by the Hungarian Central Statistical Office (KSH) on 14 August.
August 8, 2019
Consumer prices rose 0.2% over the previous month in July, contrasting a 0.2% month-on-month fall in June.
August 7, 2019
Industrial production rose a working-day-adjusted 4.1% year-on-year in June, which marked a deceleration from May’s 6.3% expansion.
July 23, 2019
On 23 July, the Monetary Council of the Hungarian National Bank (MNB) opted to keep the base rate at its current record low of 0.90% and held stable all other existing instruments.
July 21, 2019
The GKI economic sentiment index, a composite indicator, tumbled for the second consecutive month to 0.6 points in July from 2.4 points in June.