The council has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016.

However, the rate-setters have made use of “unconventional, targeted” instruments to ease monetary policy further. The council also left the O/N central bank deposit rate at -0.15% and the O/N collateralised loan rate at 0.90%. The two rates demarcate the central bank’s interest rate corridor.

In a statement released after the meeting, the council said it is “prepared for the gradual and cautious normalisation of monetary policy, which will begin with the modification of unconventional instruments”, suggesting those unconventional instruments would be adjusted before any change to the base rate is made.

However, notably absent from the statement was any remark on maintaining the current level of the base rate, as in the statements released after policy meetings in previous months. The council said core inflation excluding indirect tax effects is likely to continue to rise in the coming quarters which will be assessed in terms of the sustainable achievement of the inflation target.

“The Monetary Council closely monitors incoming macroeconomic data and will decide to adjust monetary conditions depending on their outcome,” the statement added.

The council reiterated plans, announced already in September, to cease mortgage bond purchases and phase out monetary policy interest rate swaps (MIRS) by the end of 2018, relying on an “optimal combination” of forint swaps and the interest rate corridor to adjust monetary conditions.

The council also repeated that it would launch a 1,000 billion forint programme in January 2019, dubbed Funding for Growth Scheme Fix, to raise the proportion of long-term, fixed-rate lending to SMEs.

The council decided to leave the average amount of liquidity to be crowded out in the first quarter of 2019 unchanged “at least at 400 billion-600 billion forints”. The council will next decide on the amount to be crowded out in March 2019.