Hungary's central bank has room to cut the benchmark interest rate from a record low because the recovery from the worst recession since 1991 is protracted, National Bank of Hungary (MNB) deputy-governor Júlia Király told Bloomberg.
“Monetary policy has room for easing,” Király said in an interview with Bloomberg in Zagreb. "Rate reductions are part of a monetary policy that sees no inflationary pressures while that the output gap is significant negative in the country and the recovery is slow."
The MNB's Monetary Council has cut the key rate by 425 bp since July to bring it to 5.25%.
Király, who in February became the only policy maker to vote against a rate cut this year, said concern over contagion from Greece's fiscal crisis guided her vote then.
“I don't see the same sort of tensions for” the rate meeting “two weeks from now, but uncertainty is still high,” she said. “Fundamentally, we don't see anything now that could lead to an excessive forint strengthening or weakening and through that it would endanger the inflation target or financial stability.” (MTI – Econews)