The National Bank of Hungary’s Monetary Council decided to keep the central bank’s key rate on hold at 0.90% at a monthly policy meeting. The Council has left the base rate on hold since signalling an end to an easing cycle at a policy meeting in the spring of 2016. However, the rate-setters have made use of “unconventional, targeted” instruments to ease monetary policy further. After recent policy meetings, the Council has said it is “prepared for the gradual and cautious normalisation of monetary policy”.
In its statement, the Council acknowledged the indicator had reached the 3.0% threshold and said it is “likely to rise above 3% in the coming months” but “then stay close to 3% over the monetary policy horizon”. The Council said nearly the same thing after the January policy meeting, although then it saw the measure of core inflation excluding indirect tax effects rising over 3% “in early 2019″. The rate-setters said sentiment on global financial markets had been “more favourable” since the previous monthly policy meeting, but noted a “weakening outlook” for global growth and particularly growth in the euro zone. After the policy meeting on Tuesday, the overnight deposit rate and the overnight collateralised rate were unchanged at -0.15% and 0.90%, respectively.