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MNB strengthens policy message by removing conditional

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The usual message by the Monetary Council of the National Bank of Hungary (MNB) on continued easing using unconventional, targeted tools was beefed up after a policy meeting in August with the removal of a conditional clause, the condensed minutes of the meeting released on Wednesday show.

"The Council would stand ready to ease monetary conditions further using unconventional, targeted instruments to ensure the monetary conditions necessary to meet the inflation target in a sustainable manner," the rate-setters said at the meeting, as recorded in the minutes and reported by state news wire MTI.

After previous policy meetings, going back months, the Councilʼs message has been preceded by a conditional clause: "If inflation remained persistently below the target, the Council would stand ready to ease monetary conditions further using unconventional, targeted instruments."

The minutes from the August meeting, released on Wednesday, revealed that members "agreed that, in the light of recent information, it was useful to send a stronger monetary policy message than previously by abandoning the conditionality of the forward guidance."

The Council earlier placed limits on the central bankʼs main instrument for sterilizing liquidity and introduced FX swaps as part of its "unconventional" monetary policy toolbox.

The decision to keep the base rate on hold at the policy meeting on August 22 was unanimous. MNB Governor György Matolcsy was not present at the meeting.

The Monetary Councilʼs next policy meeting will take place on September 19.

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