At the previous policy meeting in July, the council had cut the base rate by 25 bp.

The council also left the symmetric interest rate corridor around the base rate unchanged at the meeting on Tuesday, keeping the O/N deposit rate at 5.75% and the O/N collateralized loan rate at 7.75%.

In a statement released after the meeting, the council said the base rate was left on hold “in line with its stability-oriented approach to monetary policy”.

“In the current macroeconomic environment, the [MNB] can make the most effective contribution to the easing of economic agents’ increased precaution and to the restart of economic growth by achieving price stability and maintaining financial market stability,” the policymakers added.

“Careful and Patient” Approach

The council said risks surrounding international and domestic disinflation, as well as the volatility in investor sentiment warranted a “careful and patient” approach to monetary policy. 

“There may be scope for cautiously lowering interest rates further in the coming period, depending on the expected interest rate policies of the world’s leading central banks, as well as developments in the domestic inflation outlook and changes in Hungary’s risk perception,” the rate-setters added.