Hungary's central bank board deeply divided on keeping interest rate flat.

By bne IntelliNews September 9, 2010
The members of the Monetary Council (MC) of the National Bank of Hungary (NBH) are deeply divided on whether to keep the base interest rate at 5.25% at its latest meeting on August 23, the minutes of the meeting revealed. Four of the attending MC members supported this decision, while two members, including NBH governor Andras Simor, voted in favour of a 25bps rate hike, and one member backed a 25bps cut. The majority of the board members supported the cautious wait-and-see approach, considering the lack of sufficient information. According to them, tightening was not currently justified by the recent adverse developments. Furthermore, any favourable shift could only be expected following an announcement of the government's economic policy plans. Members calling for a rate rise doubted that the government measures would be enough to bring inflation down towards the medium-term target. They believed also that the inflationary pressure arose from the weakening of the forint and the fluctuations of the commodity prices.

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