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MNB keeps base rate on hold

Interview

Photo by Jessica Fejos

The Monetary Council of the National Bank of Hungary (MNB) once again decided to keep the central bankʼs key rate on hold at 0.90% at a monthly policy meeting on Tuesday.   

The Council has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016, state news agency MTI recalled. However, rate-setters have made use of "unconventional, targeted" instruments to ease monetary policy further, it added. 

The Council also left the O/N central bank deposit rate at -0.15% and the O/N collateralized loan rate at 0.90% at the meeting on Tuesday.

"In the Councilʼs assessment, maintaining the base rate and the loose monetary conditions is still necessary to achieve the inflation target in a sustainable manner," the MNB rate-setters said in a statement after the meeting, reiterating a stand taken after other recent policy meetings. 

The central bank sees CPI reaching the 3% target from the middle of 2019 as the temporary, inflation-boosting effects of oil price changes fade. The Council noted that the volatile international environment "continues to suggest a more cautious approach" to monetary policy.

The Council also said it would stick to using its current set of monetary policy tools. The condensed minutes of the policy meeting will be published at 2 p.m. on September 5.

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