Monetary Policy of Hungary, November 2022

At its November 22 meeting, the Monetary Board of the Hungarian National Bank (MNB) left the base rate unchanged at 13.00% for the second time in a row. In addition, the Bank left the overnight deposit rate, the overnight secured lending rate and the weekly secured loan rate unchanged at 12.50%, 25.00% and 15.50%, respectively.

The Bank confirmed that it expects interest rates to remain stable for an extended period of time after an aggressive tightening cycle to bring inflation to the Bank’s target range of 3.0% plus or minus one percentage point in early 2024. At the same time, headline inflation accelerated to 21.1. % in October from 20.1% in September, which is above the Bank’s target range. The MNB expects inflation to decline only gradually in the first half of 2023 and more significantly in the second half of next year.

Looking ahead, the Bank views the risks to inflation as symmetrical, with positive risks associated with persistently high energy prices and negative risks associated with a slowdown in the global economy and lower energy and other commodity prices. The bank announced that it will maintain current monetary conditions for an extended period of time until “the goal of price stability is achieved.”

Commenting on the release, ING economists Peter Virovac and Frantisek Taborski said:

” [MNB] focuses on sustainable changes in financial market conditions and will use its tools, introduced in mid-October, until there is a trend towards improved risk perception. In our view, this means that the central bank is not in a hurry to assess the market outcome of a possible positive conclusion to the rule of law debate, and will not immediately react with a monetary policy adjustment.”

The next monetary policy meeting is scheduled for December 20.

FocusEconomics Consensus Forecast experts are still assessing the latest developments and new forecasts will be published on November 29th.