Hungary’s central bank cut its key interest rate by 25 basis points to 5.5% at its August meeting, minutes released on Wednesday confirmed, marking the third consecutive quarter-point reduction.
The Magyar Nemzeti Bank’s Monetary Council voted unanimously on 25 August to lower the base rate from 5.75%. The new rate took effect on 26 August.
The overnight deposit rate was reduced to 4.5%, while the overnight collateralised lending rate fell to 6.5%, the central bank said.
The council said its future decisions on the base-rate path would be guided by the September Inflation Report. It reiterated its commitment to achieving the inflation target while maintaining positive real interest rates and financial-market stability.
The central bank said Hungary’s risk assessment would be influenced mainly by expectations surrounding the country’s fiscal path and possible adoption of the euro, as well as conditions in external markets.
The decision comes after the council judged that inflation had developed below the path forecast in June and that the risk premium on Hungarian assets had remained stable, leaving room for further monetary policy easing.
