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MNB director says rates must stay on hold until debt crisis abates

The National Bank of Hungary’s director for macroeconomics Ágnes Csermely told a conference on Thursday she thought it necessary for the central bank to keep the base rate on hold at its current level of 6% until the European debt crisis calms.

Although there is no demand-side pressure on inflation in Hungary, the MNB must continue its wait-and-see policy, because the country’s risk assessment has worsened as a result of the European debt crisis, the forint has weakened and government measures are pushing up inflation, Csermely said at a conference organized by MKB Bank. CPI is likely to come to close to 5% in 2012 before falling from 2013, she added.

The efficient operation of Hungary’s financial intermediary system must be ensured in the interest of economic growth, she said, noting that the MNB’s latest projections show households will remain net repayers of loans until 2013. Non-financial companies could become net borrowers again from the end of 2012, she added.