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Monetary Council: “Further cautious easing of policy may follow”

Analysis

The National Bank of Hungary (MNB)’s Monetary Council was again divided over the scale of a rate cut made at a meeting on October 29, the condensed minutes of the meeting published yesterday show. 

The Council voted to cut the central bank’s key rate by 20bp to 3.40% at the meeting, in line with market expectations. The minutes show that eight of the Council’s nine members voted for the 20bp cut and one voted for a 10bp reduction; external member Gyula Pleschinger voted for the smaller cut, as he did at the previous two meetings.

“Considering the outlook for inflation and the real economy and taking into account perceptions of the risks associated with the economy, further cautious easing of policy may follow,” according to the minutes.

The Council reduced the base rate by 25bp every month for twelve months until August, when they started making 20bp cuts; the next rate decision will be made on November 26.

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