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Monetary Council decides to keep key rate on hold at 7.00%

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The National Bank of Hungary's Monetary Council decided to keep the central bank's key rate on hold at 7.00% at a meeting on Tuesday, in line with market expectations.

The Council also kept the base rate unchanged at meetings in January and February, after two consecutive decisions to raise the rate by a combined 100bp.

Proposals to raise the base rate by 25bp and to lower it by 25bp, in addition to the one to keep it unchanged, were made at the meeting, MNB governor András Simor said at a press conference afterward. The "decisive majority" of rate-setters supported the proposal to keep rates on hold, he added.

In a statement published after the meeting, the Council said high volatility of risk perceptions and underlying inflation continued to "warrant a cautious policy stance".

"Monetary policy can best contribute to economic growth by maintaining a predictable economic environment, ensuring price stability and preserving the stability of the financial system," it added.

The Council said perceptions of the Hungarian economy had "changed little" in the past month in spite of the increase in global risk appetite, and it noted high volatility on global financial markets over the past six months.

The Council said it continued to "consider...important" reaching an agreement on financing for Hungary's state debt from the International Monetary Fund and the European Union "as soon as possible".

The Council also acknowledged "important structural measures" taken by the government to reduce the budget deficit.

The condensed minutes of the meeting will be published at 2pm on April 11.

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