MNB Leaves Base Rate on Hold


Photo by Adriana Iacob/

The Monetary Council of the National Bank of Hungary (MNB) left the central bank's base rate on hold at 13% at a monthly policy meeting on Tuesday, according to a report by state news wire MTI.

The council also decided on Tuesday to keep the central bank's O/N deposit rate at 12.5% and the O/N collateralized loan rate at 25%.

The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank's "interest rate corridor". The base rate is paid on mandatory reserves.

The rate-setters had signaled an end to the tightening cycle at their monthly policy meeting in September, but said tight monetary conditions would be maintained with a focus on sterilizing liquidity and improving monetary policy transmission. On October 14, the policymakers announced a decision to launch O/N deposit tenders on a daily basis. The central bank has since offered the liquidity sterilization instrument at a rate of 18%

Rate-setters Ready for "Appropriate Actions" if Risks Increase    

In a statement released after the meeting, the council said that maintaining the current level of the base rate "for a prolonged period is required to achieve the price stability objective over the monetary policy horizon".

"The council is constantly assessing incoming data and developments in the outlook for inflation and is ready to take appropriate actions if risks increase," they added.

The policy makers said the continued use of instruments reducing interbank forint liquidity "strengthens the effectiveness of monetary policy transmission in a targeted manner", adding that maintaining market stability is also "key to achieving price stability".

The council acknowledged the agreement reached on Hungary's European Union funding as a "favourable development", but said the central bank will still focus on "sustained shifts in financial market conditions", using its instruments introduced in mid-October "until a trend improvement in risk perceptions occurs".

MNB Puts 2023 CPI at 15-19.5%

The council reviewed the central bank's latest quarterly Inflation Report at the meeting and published the main forecasts.

The report puts average annual inflation at 14.5-14.7% for 2022 and at 15-19.5% for 2023.

It forecasts GDP growth of 0.5-1.5% for next year.

The Inflation Report will be published in full on Thursday.

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