The Monetary Council of the National Bank of Hungary (MNB) cut the central bank base rate by 50 basis points (bp) to 7.50% at a meeting.
The rate cut was in line with market expectations. It followed another 50 bp rate cut at a meeting on August 24 and a bigger-than-expected 100 bp reduction at a meeting on July 27 that brought the base rate back to a level before an emergency 300 bp rise -- designed to make an attack on the forint more expensive for speculative investors -- made on October 22. The rate-setters voted 7:1 for the 50 bp rate cut at the meeting in August. Just one Council member voted for a 75 bp cut.
At the August meeting, Council members said the picture of the real economy and inflation provided the scope and reinforced the need for further easing of monetary policy, the condensed minutes of the meeting reveal. MNB governor András Simor said at a conference at the weekend that inflation would have allowed for bigger rate cuts in the past months, but rate-setters held back because of worries about the country's risk assessment.
“We were apprehensive about the country's financial stability, we were apprehensive about the country's ability to get financing, so we did not make bigger rate reductions,” Simor said. (MTI – Econews)