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O/N deposit rate, base rate kept on hold

The Monetary Council of the National Bank of Hungary (MNB) decided to keep the central bank O/N deposit rate at -0.05% and the base rate at 0.90% at a monthly policy meeting on Tuesday, state news wire MTI reports.

(Photo: Adriana Iacob/Shutterstock.com)

The council has left the rates unchanged for more than half a year and have tweaked monetary policy on a quarterly basis, coinciding with the publication of the central bankʼs Inflation Report. 

After the latest report was published in September, the rate-setters decided to set the amount of liquidity to be crowded out from central bank instruments in the fourth quarter at HUF 300 billion-500 bln, up from HUF 200 bln-400 bln in the previous quarter. The rate-setters take the level into account when setting the stock of MNB swap instruments, one of the central bankʼs main policy tools.

In a statement released after the policy meeting on Tuesday, the council said they continue to "rely mainly" on incoming data and the projections in the Inflation Report.

The council also reiterated that downside inflation risks had "strengthened further" because of the economic slowdown in Europe, and that the external monetary policy environment had become looser as a result of decisions by leading central banks.

"According to global leading central banksʼ indications and market pricing, a loose monetary policy environment will be persistently maintained, and additional moderate loosening measures can be expected," the council added.

According to MTI, the council repeated that its monetary policy stance would continue to be "accommodative" and that economic agentsʼ financing costs "will be favorable".