In a statement released shortly after the rate-setting meeting the Council said economic growth was continuing, with a degree of unused capacity remaining in the economy and the domestic real economic environment having a disinflationary impact.

The Council said inflation is still substantially below the central bank’s target. The annual inflation rate was unchanged and core inflation has remained broadly the same in January 2016.

Measures of underlying inflation continued to indicate moderate inflationary pressures in the economy. Inflation may be lower over the short term than earlier expected, and it may remain below the 3% target over the forecast period, and is only likely to approach it by the end of the forecast horizon.

Slower growth in emerging markets and the deceleration in funding from the EU will lead to a slowdown in economic growth in the first half of this year. A recovery is expected from the second half of 2016. Domestic financial markets remained stable even in the deteriorating investor environment.

The forint exchange rate has been broadly unchanged and long-term government bond yields have overall been lower in the period since the previous policy decision. In the Council’s assessment, a cautious approach to monetary policy is still warranted due to uncertainty in the global financial environment.

Based on available information, the current level of the base rate and maintaining loose monetary conditions for an extended period are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy.

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