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MNB policy-makers keep base rate on hold

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The Monetary Council of the National Bank of Hungary (MNB) decided to keep the central bankʼs key rate on hold at 0.90% at its policy meeting on Tuesday, state news wire MTI reported. The MNB has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016.

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

"Maintaining the base rate and loose monetary conditions for an extended period are necessary to achieve the inflation target in a sustainable manner," the Council said in a statement released after the meeting.

The Council noted that the likelihood of downside risks to inflation materializing - risks indicated earlier in the MNBʼs September Inflation Report - has increased recently.

"The Council will stand ready to ease monetary conditions further and is considering unconventional instruments to be used accordingly," it said. "It is important for the Council to ensure that the low interest rate environment exerts its favorable effect as long as possible. To achieve this, it is necessary to reduce long-term yields and as a result the steepness of the yield curve, which will also promote the expansion of loans with long interest rate fixation," it added.

The condensed minutes of the meeting on Tuesday will be published at 2 p.m. on November 8.

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