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Jun 24, 2020

NBH cuts base rate to 0.75 percent

The Council referred to the rate cut as a “fine-tuning measure” that “supports the maintenance of price stability and the recovery of economic growth”.

 

Hungary’s central bank (NBH) has cut the base rate by 15 basis points to 0.75 percent.

According to MTI, the base rate had been set at 0.90 percent since May 25, 2016. The bank’s Monetary Council decided to leave the O/N deposit rate at -0.05 percent and the O/N and one-week collateralized loan rates at 1.85 percent.

In a statement released after a meeting yesterday, the Council referred to the rate cut as a “fine-tuning measure” that “supports the maintenance of price stability and the recovery of economic growth”. It noted that the outlook for inflation has “shifted downwards persistently” due to strong disinflationary effects, while the country’s economic performance in 2020 is “likely to be more subdued than earlier expected”.

The Council suggested its tool chest would not be expanded. “In the Council’s view, the current set of instruments provides appropriate room for maneuver to respond to emerging challenges in a targeted and flexible manner,” it said. The Council added that it “continues to consider” a government securities purchase program launched among measures responding to the coronavirus crisis “as a safety net, which it intends to use in case necessary and to the extent necessary”.