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, the Hungarian economy is likely to continue to pick up slowly over the next two years; however, the level of output will remain below its potential throughout the period. Domestic demand is expected to recover only gradually. Consequently, inflation may fall back to 3% by the end of 2012 even without policy tightening, despite the cost shocks hitting the economy."
Previously the Bank also held the interest rate at 6.00% during its June meeting, after raising it 25 basis points in January this year. Hungary reported annual inflation of 3.5% in June, down slightly from 3.9% in May, and 4.7% in April. Hungary's Central Bank has a medium term inflation target of 3%. The Hungarian economy grew at an annual rate of 2.4% in the march quarter, faster than the 1.9% growth recorded in the December quarter last year.
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