The monetary council (MC) of Hungary's central bank decided on February 18 to cut the base rate by 15bps to a new historic low of 2.70%, the bank said in a statement on its website. This was the eighteenth consecutive reduction and followed a similar reduction in January 2014. It came as a surprise for the market, which expected a 10bps cut, according to most of the analysts polled by Reuters.
The rate setters consider that domestic real economic factors are expected to continue to have a disinflationary impact, although to a declining extent. However, economic output still remains below its potential and is likely to come close to that level again at the end of the horizon relevant for monetary policy.
GDP growth is expected to pick up further in the coming quarters and to return to a more balanced pattern. With the increase in corporate investment due to the Funding for Growth Scheme and the Government’s infrastructure projects using EU funding, the recovery in household consumption is likely to be gradual.
The central bankers agreed that the global investor sentiment has been volatile recently as a result of the Fed’s decision to reduce further the pace of its asset purchases and the deterioration in perceptions of the risks associated with emerging economies. This put pressure on the currencies of the emerging economics. At the same time, the euro-area policy rate is expected to remain at low levels for an extended period. Perceptions of the risks associated with Hungary have deteriorated. Uncertainty related to the global financial environment warranted cautious approach to monetary policy, the bankers said.
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
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
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