No policy change at today's Monetary Council meeting

HUNGARY - In Brief 28 Feb 2017 by Istvan Racz

The Monetary Council's regular monthly rate-setting meeting today brought about absolutely no policy change, just as we, and essentially everybody else, expected. The base rate and the interest rate corridor remain at 0.9% and -0.05% to 0.9%, respectively. The Council's communiqué was also largely unchanged: it maintained the MNB's long-standing loosening bias, saying that the Bank remains ready to loosen monetary conditions by using non-conventional, targeted tools if required to meet its 3% inflation target. Indirectly, the MNB said by this that January's 2.3% yoy CPI-inflation figure was on track towards the 3% inflation target on a medium-term horizon. By the way, monetary conditions tightened slightly in February, through the appreciation of the forint to EURHUF 307.7 today, from 311 at the outset of the month.The Council said the Bank keeps aiming at a reduction of the stock of 3-month deposits to HUF750bn by end-March from HUF900bn at the start of this year. At present, this stock is standing at HUF875bn, and HUF400bn of deposits will mature tomorrow. The MNB is likely to accept a smaller amount than the maturing stock in new deposits at the same time.

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