The Council also left the O/N deposit rate at 5.25pc and the O/N collateralised loan rate at 7.25pc. The rates mark the ends of the central bank's symmetric interest rate corridor.

In a statement released after the meeting, the Council said the inflation outlook had "improved significantly", but the uncertain global economic environment warranted "a careful and patient approach" to monetary policy.

"In the Council’s assessment, price stability can be achieved through tight monetary conditions," they added.

The rate-setters highlighted the importance of maintaining the stability of domestic financial markets, especially the foreign exchange market, for anchoring inflation expectations and achieving price stability.

The Council said uncertainty surrounding the inflation outlook could ease in light of incoming data and information on economic policy in the coming period, adding that all factors shaping the inflation trajectory would be assessed in the central bank's next Inflation Report to be published in June.

"The Council is constantly assessing the impact of incoming macroeconomic data and financial market developments on the inflation outlook, as well as the persistence of the decrease in risk premia, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner," the statement said.

The minutes of the meeting will be published at 2:00 in the afternoon on June 10.

At a press conference after the meeting, Mihaly Varga, the central bank governor, said high global energy and commodities prices, together with rising yields in developed markets, continued to give reason for caution.

He acknowledged the mitigating impact on inflation of motor fuel price caps and limits on margins of some food and non-food products.

He said rate-setters would continue to take a data-driven approach to policy decisions, adding that incoming data and information on the new government's economic policy could reduce the uncertainty surrounding the inflation outlook.

Persistently low risk premia - affected by expectations regarding Hungary's European Union funding and fiscal policy - could increase the room for monetary policy manoeuvre, he added.

Fielding questions, Varga said two options were discussed at the meeting and the majority of Council members supported the one to keep rates on hold.

He said the prime minister's prognosis for GDP growth of 2pc in 2026 was "not far" from the NBH's forecast for 1.5-2pc GDP growth, adding that better-than-expected first-quarter GDP could put full-year growth in the top of the forecast range.

Commenting on a parliamentary resolution that would establish an investigating committee to probe the operation of the NBH's foundations and the renovation of its headquarters, Varga said the central bank's new management was committed to transparent operation.

Full report avaialble here

Source: MTI – Hungary’s national news agency since 1881. While MTI articles are usually factual, some may contain political bias, and readers should be aware that such content does not reflect the position of XpatLoop, which is neutral and independent.

Since the goal of XpatLoop is to keep readers well briefed, right across the spectrum of opinions, MTI items are shared to ensure readers are aware of all narratives within the local media.

XpatLoop believes in empowering readers to form their own views through complete and comprehensive coverage. To facilitate this XpatLoop has a balanced range of news partners, as you can see when you surf around XpatLoop.com

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