National Bank Leaves Base Rate Unchanged at 13%

The Monetary Council of the National Bank of Hungary (MNB) kept the base rate at 13% at its meeting this Tuesday, arguing that the current level of the base rate is adequate to manage fundamental inflation risks. The O/N deposit rate and the O/N collateralised borrowing rate were left unchanged at 12.5% and 25%, respectively.

In its explanatory statement, the Council stressed that the primary objective of the National Bank of Hungary is to achieve and maintain price stability.

The document pointed out that global risks have intensified since the February rate decision meeting, leading to a deterioration in the risk perception of emerging market assets, with concerns about some players in the global banking system leading to strong volatility in markets.

The MNB will monitor the extent and persistence of changes in the risk environment with particular attention, the Council said in the statement.

According to the Monetary Council, inflation peaked in January and the CPI is expected to "moderate slowly at first and then at an accelerating pace" in the coming months, returning to the central bank's tolerance band in 2024.