The Monetary Council Left the Bank Rate Unchanged at 9.5 Pct

By Rony Grynholc, President Chamber of commerce Israel- Hungary

May 25, 2009

At its meeting on 25 May 2009, the Monetary Council reviewed the latest economic and financial developments and voted to leave the central bank base rate unchanged at 9.5 pct.
The Monetary Council took a decision to maintain interest rates after considering the outlook for the real economy and inflation as well as the latest financial market developments.

The base rate may be reduced further in the coming months, if the recent improvement in sentiment continues, and if policy easing does not jeopardize the stability of the financial intermediary system and does not threaten to disrupt capital flows.
Hungary’s central bank forecasts annual average consumer price inflation of 4.5 pct and GDP contraction of 6.7 pct this year in its latest inflation report to be published on May 27. In the previous report in February the bank forecast GDP contraction of 3.5 pct and annual inflation of 4.2 pct.
Inflation is seen decreasing to 4.3 pct in 2010 as opposed to 2.8 pct in the previous Inflation Report and GDP expected to fall 0.9 pct instead of the earlier forecast 0.5 pct.
The National Bank of Hungary (NBH) expects 3.4 pct GDP growth and an inflation rate of 1.9 pct in 2011.