MNB policymakers keep base rate on hold


Photo by Jessica Fejos

The Monetary Council of the National Bank of Hungary (MNB) decided once again to keep the central bankʼs key rate on hold at 0.90% at its monthly policy meeting on Tuesday. The Council has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016.

The Council left the O/N central bank deposit rate at -0.15% and the O/N collateralized loan rate at 0.90% on Tuesday, reported state news wire MTI. 

"In the Councilʼs assessment, maintaining the loose monetary conditions for an extended period are necessary to achieve the inflation target in a sustainable manner," the rate-setters reiterated in a statement released after the meeting.  "The Council will closely monitor developments in monetary conditions and will ensure the persistence of loose monetary conditions over a prolonged period by using the extended set of monetary policy instruments," they added.

Commenting on the newest of these policy instruments intended to flatten the yield curve, the Council said the MNB would continue mortgage bond purchases and its monetary interest rate swap (MIRS) facility as programs "continuously and for a prolonged period," calling them "an integral part of the set of monetary policy instruments."

"The Monetary Council focuses on the relative position of domestic long-term yields relative to international yields when evaluating the program," the rate-setters said.

The Council noted that sentiment on international financial markets had, on the whole, deteriorated since the previous policy meeting, but added that investorsʼ perceptions about the Central and Eastern European region "continue to be positive."

Policymakers acknowledged a shift upwards on the short end of the yield curve, as well as a rise in long-term yield spreads amid the increase in yields on global markets. Over a longer horizon, however, spreads relative to the euro area and the region "decreased significantly," they added.

The condensed minutes of the meeting will be published at 2 p.m. on March 14, MTI noted.

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