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“The decisionmakers highlighted that the foreign exchange rate had remained in the stronger range, just as it had in recent months, and continued to have a disinflationary effect. However, they also stressed that the volatility of the forint exchange rate being higher than that of the region still warranted special attention,” the minutes of the August 25 meeting.
Rate-setters determined that the risk premium on domestic assets remained stable. They agreed that Hungary’s risk assessment would primarily be influenced by expectations regarding the fiscal path and euro adoption, as well as the external market environment.
“Several decisionmakers highlighted that in addition to ensuring a positive real interest rate, which was high in a regional comparison, maintaining the stability of financial markets, especially that of the foreign exchange market, supported the anchoring of inflation expectations, thereby contributing to the achievement of the target of price stability,” the minutes said.
The council voted unanimously to cut the central bank’s base rate by 25 basis points to 5.50%.
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