Central Bank Base Rate Left Unchanged at 6.25%

The Monetary Council of the National Bank of Hungary (MNB) left the base rate unchanged at 6.25% after reviewing the latest economic and financial developments at today’s meeting. The O/N deposit rate and the O/N lending rate also remained unchanged, at 5.25% and 7.25%, respectively. The central bank will continue to ensure positive real interest rates in order to achieve the inflation target in a sustainable manner.

According to the Monetary Council statement, a careful and patient approach to monetary policy remains necessary due to inflation risks arising from geopolitical tensions and the uncertain financial market environment. The Monetary Council is committed to the achievement of the inflation target in a sustainable manner. Maintaining tight monetary conditions is warranted. The Council is constantly assessing the impact of incoming macroeconomic data and financial market developments on the inflation outlook, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner.

The Council statement highlighst that the world’s leading central banks and central banks in the CEE region have kept interest rates unchanged in the past month. For this year, markets price rising interest rates from the European Central Bank and unchanged interest rates from the Federal Reserve. Central banks in the region are following a wait-and-see approach regarding monetary policy.

Hungary’s real economy is still characterised by duality; based on incoming macroeconomic data, retail sales continued to grow in February, while industrial production declined. The unemployment rate remains low in an international comparison.

Overall, the primary objective of the Magyar Nemzeti Bank (MNB) is to achieve and maintain price stability. Without prejudice to its primary objective, the MNB preserves financial stability and supports the Government’s economic policy, as well as its policy on environmental sustainability.