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24th June, 2020

MNB cuts base rate after four years

Contrary to all forecasts, the MNB’s monetary council cut the base rate for the first time in four years yesterday, from 0.9% to 0.75%.

The overnight deposit and lending rates remained unchanged at -0.05% and 1.85%.

The coronavirus crisis brought along strong deflationary tendencies that allow for monetary easing, the monetary council said in its comment.

Other central banks in Eastern Europe have lowered their base rates in response to the epidemic, Portfolio remarks.

According to the council, the strong disinflationary effects have led to a lasting downward shift in the inflation outlook, so it was necessary to fine-tune the interest rate conditions in order to maintain price stability and support the recovery.

The current toolbox of available measures provides sufficient room for manoeuvre to address emerging challenges in a targeted and flexible manner, the council said.

Sources regularly consulted, with abbreviations used in text: Népszabadság (N); Magyar Hírlap (MH); Világgazdaság (VG); Napi Gazdaság (NG); Magyar Nemzet (MN); Népszava (Nsz); Kossuth Rádió news (KR); nightly TV news (TV).

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