Magyar Nemzeti Bank Keeps Base Rate at 7.00%

The Magyar Nemzeti Bank kept its central bank base rate steady at 7.00%.  The Bank said: "The Monetary Council has decided to leave the base rate unchanged. Monetary policy can best contribute to economic growth by maintaining a predictable economic environment, ensuring price stability and preserving the stability of the financial system. High volatility of risk perceptions and underlying inflation continue to warrant a cautious policy stance."

The Magyar Nemzeti Bank previously hiked the rate 50 basis points at its November and December meetings, after last raising it 25 basis points in January this year.  Hungary reported annual inflation of 5.5% in December, up from 3.9% in October, 3.6% in September and August, 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 said annual inflation for 2011 was 3.9 percent.

The Hungarian economy grew at an annual rate of 1.4% in the September quarter, 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 15% against the US dollar over the past year, the USDHUF exchange rate last traded around 219

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