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Monetary Council considered other base rate increments

MNB

Image by Jessica Fejos

Members of the Monetary Council of the National Bank of Hungary (MNB) discussed several increments for the base rate rise at a monthly policy meeting in March before deciding on the biggest one, according to the minutes of the meeting published on the central bank's website.

"At the meeting, the council considered several options for the size of the interest rate increase, of which the Council unanimously opted for the greatest (100 basis point) hike," the minutes show.

The rate rise, to 4.4%, was double the scale of the one at the policy meeting a month earlier, which took place days before the outbreak of the war in Ukraine.

The policymakers were also equipped at the meeting on March 22 with the MNB's latest Inflation Report, which showed CPI returning to the +/- one-percentage-point tolerance band around the 3% mid-term "price stability" target only in the second half of 2023.

The minutes show the council acknowledged that the higher inflation "might lead to a sustained rise in expectations."

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