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The forint strengthened against major currencies after the Monetary Council of the Hungarian National Bank (MNB) decided to keep the base rate unchanged at 6.75%. This decision was made in response to volatile financial market developments, and risks to the inflation outlook.
The Monetary Council’s decision to maintain the base rate at 6.75% came after considering several economic factors. The lower end of the interest rate corridor, the overnight (O/N) deposit rate, remained at 5.75%, while the upper end, the overnight (O/N) lending rate, stayed at 7.75%. Before the announcement, the euro was quoted at 393.66 forints; five minutes later, it strengthened to 393.06 forints. The Swiss franc saw a slight decline from 416.77 forints to 416.31 forints, and the dollar fell from 352.63 forints to 352.05 forints.
The MNB’s stance remains focused on maintaining financial market stability and controlling inflation, key components of price stability and sustainable economic growth.
The council emphasized the importance of moderating inflation expectations while maintaining high foreign exchange reserves, a sustained current account surplus, the government’s deficit-reducing measures, and prudent monetary policy.
In conclusion, the MNB remains cautious due to international risks and uncertainties, particularly regarding geopolitical tensions and the global economic slowdown. It suggests that any future moderation in interest rate conditions will depend on the policies of major central banks, the inflation outlook, and evolving risk perceptions. The overall aim is to support Hungary’s economic stability and growth amid a challenging global environment.
Via MTI; Featured Image: Wikipedia