2019.10.2214:27:00UTC+00Hungary Central Bank Leaves Rates Unchanged

Hungary's central bank kept its benchmark interest rates unchanged, as expected, on Tuesday, citing asymmetric risks to inflation.

The Monetary Council of the Magyar Nemzeti Bank decided to hold the base rate unchanged at 0.90 percent.

The previous change in the rate was a 15 basis points reduction in May 2016. The overnight central bank deposit rate was held at -0.05 percent. In March, it was cut by 10 basis points. The one-week collateralized loan rate was retained at 0.90 percent. Inflation remains volatile and economic growth is expected to slow in the coming months, the bank said. Downside inflation risks have strengthened further, the bank added.

Hungary's GDP growth was forecast at 4.5 percent for this year and by 3.3 percent in 2020 and 2021.

"The monetary policy stance will continue to be accommodative, economic agents' financing costs will be favorable," the bank said.

The bank pointed to a "dichotomy" between the factors determining likely developments in inflation.

"Buoyant domestic demand is boosting, while weakening external activity is increasingly restraining the pace of inflation," the MNB said.