The O/N collateralised loan rate, the top of the range, stands at 1.15%, while the O/N central bank deposit rate is -0.05%. In a statement released after the meeting the Council said inflation “remains moderate for an extended period”.

“If the assumptions underlying the [NBH’s] projections hold, 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,” the Council said, echoing statements made after policy meetings since May.

The Council added that a “watchful approach” to monetary policy is still justified because of uncertainty in the global financial environment.

The Council noted that a decision announced earlier in July to reduce the frequency of tenders for the NBH’s three-month deposits, its main sterilisation instrument, and limit the amount of bids it accepts “supports a further reduction in vulnerability and encourages lending using targeted unconventional tools”.

The rate-setters reiterated that a decision on the deposit limit will be taken in September.

Republished with permission of Hungary Matters, MTI’s daily newsletter.