Nagy: MNB will cut base rate, adjust overnight rates this year

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National Bank of Hungary (MNB) is likely to cut its base lending rate below the current 1.35% this year and adjust overnight rates in order to help fuel inflation, MNB Deputy Governor Márton Nagy said during a press conference held yesterday in Budapest, online portal marketwatch.com reported today.

MNB Deputy Governor Márton Nagy speaks at a press conference in Budapest yesterday. (Photo: MTI/Tamás Kovács)

Plans are in place to adjust overnight rates well before the rate cut expected for later this year, the portal cited Nagy who added: “The central bank is ready to use any tool to reach the inflation target; cutting the key rate this year is very likely.”

Exceedingly low inflation expectations in Hungary and the forint’s performance on currency markets is hampering the MNB’s efforts in meeting its 3% inflation target, Nagy said, according to marketwatch.com.

Nagy added that he anticipates liquidity and the central bankʼs balance sheet will drop by approximately €3 billion this month, the portal reported.

The deputy governor’s comments confirm a major shift in the MNBʼs current stance on monetary policy at a time when European central banks are eagerly seeking ways to reign in inflation towards official targets, marketwatch.com reported.

The central bank’s next rate setting meeting is schedule for March 22.

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