Citing increased risk perception, Hungary leaves base rate at 5¾%

By Richard Connell

New York, June 1 - The Monetary Council of the Magyar Nemzeti Bank left its central bank base rate at 5¾% at its meeting on Monday, according to a news release issued by the bank.

The council of the Hungarian central bank examined data which showed that the domestic economy has begun to recover more strongly than expected and that the country is likely to have emerged from recession in early 2010.

The council also pointed out that Hungary's risk assessment deteriorated in the past month due to global economic developments, and uncertainties remain regarding the future outlook.

The council forecast that weak domestic demand will keep a downward pressure on prices and keep core inflation below the inflation target of 3%, but the council also noted that global energy price inflation may cause it to settle closer to the target level.

Noting that the risk perceptions involving the Hungarian economy have increased due to the debt crisis of several euro member nations, as well as uncertainties regarding its major trading partners, the council opted to leave the interest rate unchanged at 5¾%.

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