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MPC to keep base rate on hold, could apply ‘unconventional’ tools

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Rate-setters of the National Bank of Hungary (MNB) Monetary Policy Council (MPC) were committed to keep the central bank’s base rate on hold during their June 21 meeting, however they reiterated they could still decide to apply so-called “unconventional” monetary policy tools in the future if needed, condensed minutes of the meeting published today show accoring to reports.

“If the assumptions underlying the [MNBʼs] projections held, the current level of the base rate and maintaining loose monetary conditions for an extended period were consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy,” Hungarian news agency MTI quoted the minutes yesterday. 

“If the Monetary Council assessed it necessary in the future, it might also decide to use unconventional tools,” the minutes say according to MTI. The Council added that a “watchful approach” to monetary policy is still justified because of uncertainty in the global financial environment.

The MPC had clearly signaled the end of its easing cycle in May, and no macro data or financial market development has altered the big picture over the last one month.

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