Hungarian central bank cuts base rate to 0.60 pct

  • World
  • Wednesday, 22 Jul 2020

BUDAPEST, July 21 (Xinhua) -- The Hungarian central bank MNB cut its base rate from 0.75 percent to 0.60 percent on Tuesday.

"At its meeting on July 21, 2020, the Monetary Council of the central bank reviewed the latest economic and financial developments and decided on the following structure of central bank interest rates with effect from July 22, 2020: Central base rate changes from 0.75 to 0.60 percent," MNB said in a statement.

The decision follows a similar cut on June 23, when the rate had been slashed from 0.90 percent to 0.75 percent.

"To maintain price stability and to support the restoration of economic growth, the Monetary Council reduced the base rate by 15 basis points to 0.60 percent. The Monetary Council left the overnight deposit rate at -0.05 percent and the overnight and the one-week collateralized lending rates at 1.85 percent unchanged," MNB explained.

Since the move of the central bank had been expected, the local currency, the Hungarian forint, stayed mostly unchanged following the decision, trading around 350.50 against the euro and 307.2 against the U.S. dollar.

"In terms of size, the cut can be considered as symbolic, its aim may have been to stimulate the economy through lower interest rates and through the weakening of the forint's exchange rate. The interest rate cut also has a communication purpose, indicating that the central bank still had room for maneuver. The interest rate cut is also favorable for the MNB, as it reduces the interest payable on funds placed with the central bank," Gabor Regos, head of division of the Macroeconomic Business Unit of think tank Szazadveg, commented, quoted by the Hungarian news agency MTI.

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