The building of the NBH in Budapest – Photo: wikimedia

Central bank leaves base rate on hold

Hungarian rate-setters left the central bank base rate at 0.60 percent on Tuesday, while also leaving the interest rate corridor unchanged, the National Bank of Hungary (NBH) announced.

The Council also decided on Tuesday to leave the O/N deposit rate at -0.05 percent and the O/N and one-week collateralised loan rates at 1.85 percent.

The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s interest rate corridor.

In a statement released after the meeting, the Monetary Council pointed to an increase in upside risks to the inflation outlook, adding that its policymakers were prepared to proactively tighten policy.

“In the Monetary Council’s assessment, risks to the outlook for inflation have recently continued to strengthen even further….The Monetary Council reiterates that they are ready to tighten monetary conditions in a proactive manner to the extent necessary in order to ensure price stability and to mitigate inflation risks.”

The Council reaffirmed its commitment to maintaining price stability, adding that it was the NBH’s “clear intention to prevent the current uncertain environment from causing a sustained rise in inflation.”

The projection in the NBH’s next Inflation Report, to be discussed at a policy meeting in June, “will be key in assessing the outlook for inflation and developments related to the economic recovery,” it added.

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