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Oct 23, 2019

Central bank leaves base rate on hold

The National Bank of Hungary has left the base rate unchanged at 0.90 percent at a meeting held on Tuesday.

The National Bank of Hungary has left the base rate unchanged at 0.90 percent at a meeting held on Tuesday.

According to MTI, the Council has left the rates unchanged for more than half a year and have tweaked monetary policy on a quarterly basis, coinciding with the publication of the central bank’s Inflation Report.

After the latest Inflation Report was published in September, the rate-setters decided to set the amount of liquidity to be crowded out from central bank instruments in the fourth quarter at HUF 300-500 billion (EUR 907m-1.5bn), up from 200-400 billion in the previous quarter. The rate-setters take the level into account when setting the stock of NBH swap instruments, one of the central bank’s main policy tools.

Following the meeting on Tuesday, the Council said they continue to “rely mainly” on incoming data and the projections in the Inflation Report.

The Council also reiterated that downside inflation risks had “strengthened further” because of the economic slowdown in Europe, and that the external monetary policy environment had become looser as a result of decisions made by leading central banks.

The Council attributed the drop in headline inflation in September to a decline in prices for unprocessed food and fuel, but said higher core inflation measures were due to rising telecommunications prices.

The Council noted that a “significant part” of the sale of the popular Plus government bonds for retail investors were in the capital while purchases were lower in the rest of the country.

Photo credit: kurt.hu