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Central bank says it will hold base rate, consider ‘unconventional’ tools

Rate-setters of the National Bank of Hungaryʼs (MNB) Monetary Policy Council (MPC) voiced commitment to keeping the central bank’s base rate on hold, and suggested they could still decide to apply so-called “unconventional” monetary policy tools in the future if needed, according to yesterdayʼs release of the minutes from their June 21 meeting.

“If the assumptions underlying the [MNBʼs] projections held, the current level of the base rate and maintaining loose monetary conditions for an extended period were consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy,” the minutes say according to Hungarian news agency MTI. “If the Monetary Council assessed it necessary in the future, it might also decide to use unconventional tools.”

The Council added that a “watchful approach” to monetary policy is still justified because of uncertainty in the global financial environment.

The Council had clearly signaled the end of its easing cycle in May, and no macro data or financial market development has altered the big picture over the last month, MTI reported.