Hungary keeps base rate at 1.35% amid ‘disinflationary’ environment

By Susanna Moon

Chicago, Feb. 23 – The Monetary Council of Hungary’s Magyar Nemzeti Bank said it again decided to hold the central bank base rate unchanged at 1.35% at its meeting on Tuesday.

The country’s economic growth goes on while inflation remains “substantially” below the target rate, according to a bank announcement.

There is still some unused capacity in the economy, the bank said, and thus the domestic real economic environment continues to have a disinflationary impact.

Annual inflation was unchanged and core inflation has remained unchanged as well in January.

The bank said that underlying inflation continued to show moderate pressures and that inflation may be lower over the short term than expected because of low oil prices.

Core inflation, meanwhile, is expected to rise gradually, as household consumption expands and wage growth accelerates.

The bank noted that concerns about the growth outlook are driving the attitudes toward the global financial markets, which has weakened somewhat since the council’s last meeting on Jan. 26, when the bank also chose to keep the base rate unchanged at 1.35%.

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