Hungary Central Bank Keeps Interest Rate at 6.00%

The Magyar Nemzeti Bank kept its central bank base rate unchanged at 6.00%.  The Bank said: "In the Council's judgement, the outlook for growth has worsened significantly recently. Consumption demand is likely to be persistently low, reflecting the protracted process of balance sheet adjustment by households, uncertain income prospects and the further tightening in credit conditions. Significant fiscal adjustment next year is also likely to act as a brake on domestic demand growth."

The Magyar Nemzeti Bank also held the interest rate unchanged at 6.00% during its September meeting, after raising it 25 basis points in January this year.  Hungary reported annual inflation of 3.6% in September and 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) has lost about 2% against the US dollar this year, the HUFUSD exchange rate last traded around 214

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