Monday, June 20, 2011

Hungary Central Bank Holds Interest Rate at 6.00%

The Magyar Nemzeti Bank held its benchmark base rate unchanged at 6.00% despite inflation rising above its target.  The Bank said: "Inflation is likely to be above target in the short term, due to cost-push pressures stemming from the rise in commodity prices. However, owing to the disciplining effect on price and wage-setting of the persistent weakness in domestic demand and high unemployment, the 3% inflation target can be achieved at the end of 2012 by maintaining interest rates at their current level over a sustained period."

Previously the Bank also held the interest rate at 6.00% in May, after raising it 25 basis points in January this year.  Hungary reported annual inflation of 3.9% in May, down slightly from 4.7% in April, and 4.5% in March.  Hungary's Central Bank has a medium term inflation target of 3%.


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