NBH Deputy Governor Says Cutting Key Rate This Year Very Likely
- 11 Mar 2016 8:00 AM
It is “very likely” that the central bank will cuts its key rate— currently 1.35%—this year, National Bank of Hungary (NBH) deputy governor Márton Nagy said at a conference of business weekly Figyelő. Nagy said the risk of the NBH missing its CPI target is great under current monetary conditions, Hungary instantly imports low external CPI, inflation expectations have never been this low and risk perception has improved too much too soon.
Central bank policy has significantly changed and even looser Hungarian monetary conditions are needed and the central bank is ready to use any tool to reach its CPI goal.
The interest rate corridor could be adjusted soon, he said. The deputy governor also said that the forint’s resistance was “remarkable”, the NBH’s balance sheet was set to shrink by 3 billion euros in March and that household consumption would boost economic growth in 2016.
Reuters reported that Nagy said with current monetary conditions, and with the forint’s current exchange rate, the NBH was on course to miss its medium-term inflation target, but the central bank is ready to use all available tools to meet its inflation target and a resumption of interest rate cuts is possible this year.
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