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• Base Rate of 6.5% Kept By Hungary's National Bank - To Remain Unchanged 'For An Extended Period'?

Base Rate of 6.5% Kept By Hungary's National Bank - To Remain Unchanged 'For An Extended Period'?

• 30 Apr 2025 6:37 AM

The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base rate unchanged at 6.50pc at a monthly policy meeting on Tuesday.

The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank's symmetric interest rate corridor.

In a statement released after the meeting, the Council affirmed its commitment to achieving the inflation target in a sustainable manner and pointed to the need for a "careful and patient" approach to monetary policy amid risks to the inflation environment and trade policy and geopolitical tensions.

"Maintaining tight monetary conditions is warranted," the policy makers said.

At a press conference after the meeting, central bank governor Mihaly Varga said inflation was slowing further in April and was expected to approach the upper end of the NBH's 3pc +/-1pp tolerance band in the coming months.

He also said inflation risks had strengthened because of the timing and contrasting effects of tariffs announcements, while volatility on international financial markets had grown and risk aversion on emerging markets had increased.

Maintaining financial market stability and anchoring inflation expectations is of "key importance", he said. He added that the decision to keep the base rate on hold had been taken in line with the Council's "stability-oriented" approach.

The base rate could remain at its current level "for an extended period", he said.

Fielding questions, Varga said the NBH's new management was committed to transparency and was in the process of "rationalising" the central bank's operations. He added that the NBH had to focus on its primary tasks, such as achieving price stability, and didn't need to operate foundations.

He said talks with the government on amendments to the central bank act had finished and a bill could be submitted to lawmakers.

Full press release available here

Source: 
MTI - The Hungarian News Agency, founded in 1881.

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