However, the rate-setters have made use of “unconventional, targeted” instruments to ease monetary policy further, such as placing a limit on the central bank’s main instrument for sterilising liquidity as well as modifying the interest rate corridor, a band around the base rate that prevents extreme fluctuations of interbank rates.

In a statement released shortly after the meeting, the council repeated its earlier stand on keeping the base rate on hold “for an extended period”, while staying prepared to ease monetary conditions with unconventional instruments.

The council noted that in December 2016 it set a 750 billion forint (EUR 2.43bn) upper limit on the stock of three-month central bank deposits at the end of the first quarter of 2017 and said it would decide on its level for the end of the second quarter of the year in March.

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