Monetary Council Cuts Base Rate by 25 Basis Points

At its meeting on June 18, 2024, the Monetary Council of the National Bank of Hungary (MNB) reviewed the latest economic and financial developments and decided to cut the central bank's base rate by 25 basis points to 7.00%, lowering the two ends of the interest rate corridor by the same amount with effect from June 19, 2024.

Under the decision, the lower end of the interest rate corridor, the overnight (O/N) deposit rate, will be lowered to 6.0%, while the upper end, the overnight (O/N) lending rate, will be lowered to 8.0%.

In a statement issued after the meeting, the Council's assessment of the situation was that the inflation outlook had improved over the past quarter. In addition, the pick-up in growth in the Hungarian economy, historically high foreign exchange reserves, a sustained improvement in the current account and prudent monetary policy are all working towards strengthening the country's risk perception. At the same time, the volatile financial market environment, significant geopolitical tensions and risks to the inflation outlook continue to call for a cautious and patient approach. Monetary policy will continue to contribute to maintaining financial market stability and achieving the inflation target in a sustainable manner by ensuring positive real interest rates.

In the view of the Monetary Council, the risks surrounding global and domestic disinflation, the volatility of international investor sentiment, and the expected interest rate policies of the global central banks continue to warrant a cautious and patient monetary policy stance looking ahead. The Council continuously assesses incoming macroeconomic data, the inflation outlook and developments in the risk environment, which inform its prudent and data-driven decisions on the level of the key policy rate.