Hungary keeps benchmark interest rate at 0.9 percent

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The Monetary Council of the MNB decided to keep both its key one-week lending rate at 0.9 percent and its overnight deposit rate at -0.15 percent.

According to, the move was in line with analysts’ expectations.

The lending rate was last reduced by 15 basis points in May 2016, while the overnight deposit rate was reduced by 10 basis points last September.

The Monetary Council said in its decision that while crude oil prices resulted in a temporary spike in inflation, the inflationary effect is transitory and the targeted 3 percent inflation was well within sight.

In July, year-on-year inflation was 3.4 percent in Hungary, while core inflation (which does not take into account changes in volatile food and energy prices) was 2.5 percent.

The Monetary Council said the rise in domestic wages only has a moderate inflationary effect while according to forecasts of the European Central Bank (ECB) core inflationary processes will also remain low. The ECB also expects continued lax monetary policies in the Eurozone.

The fundamentals of the Hungarian economy remain strong, GDP growth is on a strong and sustainable path, foreign debt has been substantially reduced and debt servicing capabilities are also solid.


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