MNB aims to put excessive rate cut expectations in check


The National Bank of Hungary (MNB) perceives market expectations for further monetary easing as “excessive” and wants to weaken these expectations, deputy governor Márton Nagy (pictured) said today at a press conference, according to Hungarian news agency MTI.

The MNB does not want to reach the “ideally lowest” rate, but a rate that is sustainable until the middle of 2018, Nagy said. 

The MNBʼs policy makers decided to lower the central bankʼs key rate for the second month in a row at a meeting on Tuesday.

Nagy said it remained a question whether or not there would be a third or a fourth cut at policy meetings in May and June.

Measures by the government, rather than the central bank, will support economic growth in future, with fiscal policy taking on the role of incentive provider, Nagy said. If fiscal policy is loose, monetary policy does not have to be so loose, he added.

The MNB will introduce mandatory market making for the Budapest Interbank Offered Rate (BUBOR) for one- and three-month terms from May 2 with the goal of establishing it as a genuine benchmark rate, Nagy said. At present, the BUBOR tracks the base rate and fails to fulfill its function as there is no turnover, he explained. Mandatory dealing on the BUBOR market could be introduced if turnover does not pick up by September, he added.


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