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
www.CentralBankNews.info
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