Rate-setters of the National Bank of Hungary (NBH) on Tuesday kept the base rate on hold at 13.00%. The Monetary Council also decided at its policy meeting to keep the central bank’s O/N deposit rate at 12.50% and the O/N collateralised loan rate at 25.00%. The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”. The base rate is paid on mandatory reserves. The decision was in line with expectations.
In a statement released after the meeting, the Council said the NBH will continue to use the instruments introduced in mid-October “as long as it is warranted by the maintenance of market stability and developments in risk perceptions”. It said tight monetary conditions would be maintained over a prolonged period, ensuring that “inflation expectations are anchored and the inflation target is achieved in a sustainable manner”. The Council added that the instruments applied over the past month with the aim of draining interbank liquidity were effective in strengthening monetary policy transmission. At a press conference after the meeting, NBH deputy governor Barnabás Virág said Hungary’s current account had “bottomed out” in September and would improve “more quickly than expected”. Concerning inflation, Virág said a turnaround in fundamental consumer price trends was “taking shape”, adding that an increase in headline CPI in October could be driven by volatile food prices.