Hungary holds rate at 0.9% as economy picks up, inflation constrained

By Susanna Moon

Chicago, June 21 – The Monetary Council of Hungary’s Magyar Nemzeti Bank decided to maintain its central bank base rate at 0.9% at its meeting on Tuesday.

The country’s economy is “picking up again” after a brief drop at the start of the year; however, “a degree of unused capacity remains in the economy, and inflation remains persistently below the bank’s target,” according to a bank announcement.

Annual inflation and core inflation fell in May, with the country’s consumer price inflation held back by “persistently low global inflation” and signs pointing to a moderate inflationary setting.

Whole-economy wage growth continued to accelerate, which in turn will likely cause core inflation to tick up via growing household consumption, the council said.

Inflation remains below the 3% target over the forecast period, the announcement noted.

The council said on May 24 that it had continued to loosen its monetary policy with another cut in the central bank base rate by 15 basis points to 0.9% from 1.05%.

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