The National Bank of Hungary’s Monetary Council lowered the central bank’s key rate by 15bp to 0.90pc at a monthly policy meeting on Tuesday. The decision was in line with market expectations. “Based on available information, the inflation outlook and the cyclical position of the real economy point to maintaining the 0.9pc base rate for an extended period,” the council said, signalling an end to the easing cycle. The 0.9pc rate “ensures the medium-term achievement of the inflation target and a corresponding degree of support to the economy”, it added. The council noted that inflation remains under the 3pc “price stability” target over the National Bank’s whole forecast horizon for the period affected by monetary policy, and is seen approaching the mark only in the first half of 2018. The rate-setters said recent data suggest the risk of second-round effects resulting from an excessively low level of inflation expectations has diminished. The expansionary impact on demand of next year’s draft budget was likely to speed up the closure of the output gap.
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