Hungary Keeps Main Rate at Record Low 2.1% for 4th MonthZoltan Simon
Hungary’s central bank left its benchmark interest rate unchanged at a record low for a fourth month, in line with its guidance for steady borrowing costs until end-2015 following two years of easing.
Policy makers held the two-week deposit rate at 2.1 percent, the National Bank of Hungary said today, matching the forecasts of all 23 economists surveyed by Bloomberg.
The rate panel repeated calls for “maintaining current loose monetary conditions for an extended period,” according to a statement made after the decision. The regulator reduced the benchmark rate with 24 consecutive cuts from 7 percent in 2012.
“In spite of negative inflation, the Monetary Council appears to be in no mood to resume policy easing,” William Jackson, a London-based economist at Capital Economics Ltd., said in a report today. “But equally, there will be little pressure to raise interest rates and we expect monetary conditions to remain extremely loose well into next year.”
The forint weakened 0.2 percent against the euro to 306.34 per euro at 3:28 p.m. in Budapest. The currency has weakened about 2.9 percent this year, the third-worst performance among 24 emerging-market currencies tracked by Bloomberg behind the Russian ruble and the Argentinian peso.
Consumer prices fell 0.4 percent in October from a year earlier. The inflation rate has dropped as the government cut household utility bills, according to the statistics office. The central bank estimates average inflation of 0.1 percent this year and 2.5 percent next year.
Hungary’s central bank isn’t alone with record-low interest rates in the region. Romanian policy makers reduced their main rate by a quarter point this month to 2.75 percent and have “leeway” to continue lowering it, rate-setter Daniel Daianu said yesterday.
Poland defied predictions for a cut on Nov. 5, keeping the benchmark rate at a record-low 2 percent. In the Czech Republic, policy makers have resorted to market interventions to weaken the koruna after the central bank cut the main rate to what it calls a “technical zero” of 0.05 percent in 2012.