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No shift in inflation outlook; MNB policy-makers remain cautious

EU

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The rate-setting Monetary Council of the National Bank of Hungary (MNB) agreed that there has been no shift in the outlook for inflation at a monthly policy meeting in October, but said a cautious approach is still justified because of external uncertainty.

"Members concluded that incoming macroeconomic data in the last month had been consistent with the projection of the September Inflation Report; therefore, in the decision-makersʼ assessment, no shift had occurred in the outlook for inflation since the previous policy decision," read the minutes from the meeting released on Wednesday, reported by state news agency MTI.

The latest inflation data show Hungaryʼs annualized consumer price index stood at 2.8% in September, falling under the MNBʼs 3% mid-term target for the first time since January. However, core inflation, which excludes volatile food and fuel prices, was a seasonally adjusted 3.9%, noted MTI.

The minutes note that several members at the meeting pointed to the impact on core inflation of a sharp increase in telecommunication sector prices.

Most Council members drew attention to continuing uncertainty related to the external environment, such as Brexit and international trade policy, paired with downside inflation risks resulting from the slowdown in Europe, and were unanimous in their opinion that a cautious approach in domestic monetary policy decisions was still warranted.

The minutes show the Council voted unanimously to keep the central bank O/N deposit rate at -0.05% and the base rate at 0.90% at the policy meeting on October 22.

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