Ferenc Gerhardt said rate cuts could continue “as long as the conditions allow”. “If some kind of drama happens in the world, then naturally the rate cuts cannot continue,” he added.
György Kocziszky noted that rate-setters must weigh other factors beside inflation when taking monetary policy decisions.
“In addition to inflation, the size of the output gap, the tendency of its changes and the development of [Hungary’s] risk premium are factors considered in the course of deciding [monetary policy],” he said. “Obviously, it is different in a situation of macroeconomic balance and again different during a period of crisis or near stagflation. The inflation targeting regime would be oversimplified if we said that a rate rise must be the automatic response to rising inflation,” he added.
Gerhardt and Kocziszky are two of four external members of the MNB‘s Monetary Council. The external members outvoted the Council’s internal members to cut the base rate by 25bp in August. Another cut, decided by a “narrow vote”, followed in September.
At the center of the debate between the external and internal rate-setters is the effect of monetary policy on growth and inflation.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
