MNB deputy governor: Central bank concludes easing cycle

MNB

The National Bank of Hungary (MNB) has concluded its easing cycle, National Bank of Hungary deputy governor Márton Nagy told journalists today, according to Hungarian news agency MTI. The MNB has no need to either cut or raise rates right now, Nagy said.

The MNBʼs Monetary Council decided to lower the central bankʼs key rate by 15 bps to 0.90% at a monthly policy meeting on Tuesday. The decision was in line with market expectations. 

Nagy said the key rate is “at an appropriate level right now”, there is no need for further rate cuts and the key rate should remain unchanged “for as long as possible”.

The MNB will only move if action is needed to meet the CPI goal, but the June Inflation Report will not contain data to change the current stance, the deputy governor added.

The MNB will not adjust its 2016 GDP growth prediction by much in June and it expects GDP growth to accelerate in the second half of the year because of lending to small firms, home construction and allocations of EU funding. The MNB sees GDP growth at around 3% this year.

Referencing events abroad Nagy said that the central bank considers moves by the Federal Reserve in the United States and Brexit as potential risks to economic growth.

At present, there is no need for any additional monetary steps. If the need should arise for monetary loosening, the MNB would use unconventional tools, Nagy said, adding that the self-financing program may be fine-tuned if further easing is needed.

Talking about the BUBOR market Nagy said the MNB was satisfied with its performance in May. A review of the BUBOR market in September is still on the table as it is in a state of development at the moment and the BUBOR could also be part of the possible fine-tuning measures.

Nagy reiterated that the MNB has no exchange target for the forint and said that the central bank prefers when the forint is stable.

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