“Members agreed that a further increase in interest rates now was not justified along the path of inflation implied by the report,” according to the minutes. “Members were unanimous in concluding that the baseline projection in the report, which assumed that the current 6% level of official interest rates might ensure that inflation would come back to the 3% target in 2012 H2, should be taken as the starting point for a policy decision [in March],” the minutes said.
It was noted that although it is necessary to maintain the base rate at 6.00% for a longer period in order to meet the 3% “price stability” target, “a reduction in the base rate might be justified if the recovery in lending turned out to be slower than expected and domestic demand to be weaker than projected,” the minutes said. “By contrast, tighter monetary conditions might be needed if the pass-through of shocks into consumer prices turned out to be faster,” the minutes added.
MNB governor András Simor said the decision to keep rates on hold was unanimous shortly after the meeting on March 28. The MNB published its fresh Quarterly Inflation Report on the same day.
The minutes said members agreed that Hungary’s risk premium had fallen significantly since the publication of the previous inflation report, in part because of positive expectations for measures outlined in the government’s structural reform programme, dubbed the Széll Kálmán plan, unveiled on March 1, as well as because of“the commitment to meet the inflation target” and improved sentiment toward emerging market economies.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
