Monetary Council Keeps Base Interest Rate at 13% Amid Expectations of Monetary Policy Simplification

Monetary Council Keeps Base Interest Rate at 13% Amid Expectations of Monetary Policy Simplification

Interest Rate Maintains Status Quo

The Monetary Council has held steady with the base interest rate, keeping it at 13%, much to the alignment of market expectations. This decision comes at a time when investors are eagerly awaiting an announcement on potential simplifications to the monetary policy toolkit. The statement, expected to be released at 3 pm, will likely shed light on the future of the one-day central bank deposit, which has served as the main guidance tool to date, and the potential reestablishment of the base interest rate as the benchmark.

Stock Market Reaction and Currency Performance

Shortly after the interest rate decision by the National Bank of Hungary (MNB), the mood on the Hungarian stock exchange held a positive tone. This can be attributed primarily to the strong performance of the OTP Bank. The BUX index is currently showing an uptick of 0.8%. In the currency market, the forint is up by 0.4% against the euro, maintaining an exchange rate of 388 forint and 90 fillér per euro.

Upcoming GDP and Inflation Forecasts

As part of the inflation report deliberated by the Monetary Council today, the MNB plans to release its latest GDP and inflation forecasts concurrently with the statement. These forecasts are highly anticipated by investors and market watchers alike, and their release will likely influence market movements and investor decisions in the near term.

Key Takeaways and Market Implications

The decision by the Monetary Council to maintain the base interest rate at 13% was not unexpected by investors. The upcoming announcement concerning potential simplifications to the monetary policy toolkit, including the possible reestablishment of the base interest rate as the benchmark, is eagerly anticipated. The MNB’s release of its latest GDP and inflation forecasts alongside this announcement will also have significant implications for investors and the financial market.

The positive performance of the Hungarian stock exchange, particularly the strong showing of OTP Bank, has kept the market mood upbeat with the BUX index up 0.8%. The forint’s performance against the euro, currently up 0.4%, with an exchange rate of 388 forint and 90 fillér per euro, will likely influence currency market dynamics and investor decisions in the near term.