Hungary c-bank again cuts base rate to new record low of 4.5%, in line with expectations.

By bne IntelliNews May 29, 2013

The monetary council of Hungary's central bank decided on May 28 to cut the base rate by 0.25bps to a new historic low of 4.50%, the bank said in a statement on its website. This was the tenth consecutive reduction and the decision was broadly expected by market analysts.

The rate setters consider that recent downward trend in underlying inflation continues to reflect the strong downward pressure of weak domestic demand on prices. Developments in energy and commodity prices as well as the forint exchange rate have also contributed to the disinflation process. The council expects that the inflation risks will remain moderate in the medium term.

The central bank confirmed its previous projections for the economic growth to to resume in 2013. The Hungarian economy may recover from recession already the first half of 2013. A sustained pick-up in growth is likely to occur from the end 2013 as demand in Hungary’s export markets improves.

The rate setters concluded that perceptions of the risks associated with the economy have improved. However, the contrast between the benign financial market environment and the weak outlook for global growth continues to pose a risk, which warrants a cautious approach to policy. The council will consider a further reduction of interest rates if the medium-term outlook for inflation remains in line with the bank’s 3% target and the improvement in financial market sentiment is sustained.

Related Articles

Hungarian opposition parties seek explanation for secret admission of asylum seekers

Despite its all-out attacks on the EU’s refugee quotas, Viktor Orban's government secretly gave permission for the admission of the same number of asylum seekers to the country in 2017 as ... more

Hungarian president sets date for parliamentary election

President Janos Ader has set April 8 as the date of Hungary's general election, it was announced on January 11. This is the earliest possible Sunday that the ballot can be held under the law. The ... more

Hungarian government backtracks from collecting fines from opposition parties before election

The Economy Ministry on January 10 asked the tax authority to delay collecting fines from opposition parties imposed by the state auditor ASZ to ensure that their pre-election budgets and campaign ... more

Dismiss