Hungary: Central Bank cuts base rate by 20 basis points
October 29, 2013
At its 29 October monetary policy meeting, the Central Bank decided to cut the base rate by 20 basis points. The decision to cut the base rate from 3.60% to 3.40% was in line with what the markets had expected. This marks the fifteenth consecutive rate cut as the Bank tries to boost the economy.
The Monetary Council pointed out that the economy is expected to grow moderately this year before gaining momentum in 2014, which will mainly be supported by an improvement in exports and a gradual pick up in domestic demand components. This will reflect, "ongoing deleveraging and the cautious behavior of households."
Regarding price developments, the Central Bank said that inflationary pressures would remain low in the medium term. The Bank acknowledged that, "inflation is expected to remain around the 3.0% target over the forecast period, which provides scope to ease monetary policy further."
FocusEconomics Consensus Forecast panelists see the base rate at 4.49% by the end of this year. For next year, the panel expects the rate to end the year at 4.67%.
Author: Dirina Mançellari, Senior Economist