In an unexpected move, the Hungarian central bank MNB cut its base rate from 0.90 percent to 0.75 percent on Tuesday.
"At its meeting on June 23, 2020, the Monetary Council reviewed the latest economic and financial developments and decided on the following structure of central bank interest rates with effect from June 24, 2020: Central base rate changes from 0.90 to 0.75 percent," the MNB said in a statement.
"In order to maintain price stability and support the recovery of economic growth, it has become necessary to fine-tune monetary conditions: to reduce the base rate," it explained.
The local currency, the Hungarian forint, weakened following the announcement, from 348.71 HUF to 350 HUF against the euro and from 308.42 HUF to 309.31 HUF versus the U.S. dollar.
"Over the past three months, monetary policy has focused on monitoring developments in the coronavirus crisis. This is not an easy situation, as the outlook regarding inflation and growth is still quite blurred, and a lot depends on the dynamics of the coronavirus epidemic," leading Hungarian online economic portal Portfolio commented following the decision.
"Most importantly, we can be calm regarding the situation of financial stability situation, as the forint stopped falling, and the exchange rate has been much more stable since the correction," Portfolio told, adding that the foreign exchange reserves and government's cash stocks have been replenished, while regional capital outflows have stopped.
Source: Xinhua |
