Wednesday, September 21, 2011

Magyar Nemzeti Bank (Hungary) Holds Rate at 6.00%

The Magyar Nemzeti Bank maintained its benchmark base rate steady at 6.00% as inflation drifted down towards its target.  The Bank said: "In the Council's judgement, Hungarian economic growth is likely to remain subdued over the next two years, with the level of output remaining below its potential throughout the period. Medium-term upside risks to inflation have fallen due to weak domestic demand. Inflation may fall back to 3% by the beginning of 2013, as the effects of cost shocks and increases in indirect taxes wear off."

The Magyar Nemzeti Bank also kept the interest rate at 6.00% during its August meeting, after raising it 25 basis points in January this year.  Hungary reported annual inflation of 3.6% in August, compared to 3.1% in July, 3.5% in June, 3.9% in May, and 4.7% in April.  Hungary's Central Bank has a medium term inflation target of 3%, while the Bank expects inflation to average 3.9% this year.

The Hungarian economy grew at an annual rate of 1.5% in the June quarter, compared to 2.4% in the march quarter, and 1.9% GDP growth recorded in the December quarter last year.  The Hungarian forint (HUF) is roughly flat against the US dollar this year, the HUFUSD exchange rate last traded around 212.25


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