Downward Rate Cycle Resumed in Hungary – Currency Thoughts
Downward Rate Cycle Resumed in Hungary
September 24, 2024
From a base rate peak of 13.0% maintained for nearly a year, officials initiated a declining trend eleven months ago that methodically made cuts at ten straight monthly meetings until the one in August when the rate was kept at 6.75%. CPI inflation had crested slightly above 25% in January 2023 and fallen to 9.9% by October when easing began. There had then been a rapid price deceleration to 3.6% by March 2024, followed by a back-up to 4.1% in July. The latest CPI release, however, printed at a 42-month low of 3.4%.
A statement explaining today’s resumed interest rate downtrend to 6.50% promises to maintain a cautious approach to policy normalization, noting that interest rates will remain positive in real terms even though economic growth stalled last quarter amid lessening labor market tightness. Inflation is projected to be within its target range. Policy patience is justified by significant domestic and global uncertainties and a risk of investor volatility.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Magyar Nemzeti Bank
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