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MNB policymakers continue to adopt cautious approach

Interview

Jessica Fejos

The Monetary Council of the National Bank of Hungary (MNB) agreed that recent macroeconomic data are consistent with the central bankʼs baseline projections, but noted that an uncertain environment justifies a cautious, data-driven approach ahead, minutes from the July rate-setting meeting reveal.


"Council members agreed that data released since the previous interest rate decision were consistent with the baseline projection in the June Inflation Report," the minutes said, adding that policy makers "unanimously argued that the uncertain and fast-changing macroeconomic environment would justify a data-driven and cautious approach in the coming period as well."

Council members were also in agreement on the impact, affecting the inflation outlook in the second half of the year, of the spillover of disinflationary effects of a slowdown in Europe; on changes in the monetary policies of the worldʼs leading central banks; on the impact on savings of the new MÁP Plusz retail government securities; and on the economic consequences of countercyclical fiscal policy.

The Council reiterated the upside risk to inflation of strong domestic demand, contrasted with the downside risk of weakening external activity, but added that sentiment on international financial markets had "improved slightly" since the previous policy meeting.

The minutes show that the Council voted unanimously to keep the central bank O/N deposit rate at -0.05% and the base rate at 0.90% at the policy meeting on July 23.

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