“In the Council’s assessment, the policy rate has reached the level which ensures the medium-term achievement of the inflation target and a corresponding degree of support to the economy,” the rate-setters said in a statement after the meeting, signalling an end to the easing cycle.

“If the assumptions underlying the bank’s projections hold, the inflation outlook and the cyclical position of the economy point to the direction of loose monetary conditions for an extended period,” the Council added. The Council said inflationary pressures are “likely to remain moderate” as the output gap closes “only gradually”.

The Council noted that a “cautious approach” to monetary policy was warranted because of “uncertainty in the global financial environment”. The forint firmed from around 309.62 to the euro just before the rate decision was announced to 307.85 about half an hour after the Council statement was released.

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