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National Bank’s loose monetary policy to continue

July 23rd, 2019

The leading independent business news site agrees with the decision of the National Bank to keep its base rate low. It predicts that as growth slows down in Europe, the Hungarian National Bank can keep its loose monetary policy alive for a long time without having to fear a sudden weakening of the national currency.

Portfolio praises the National Bank’s courage in resisting pressure to raise its base rate. The independent business news site recalls that the National Bank has been criticized for not following the US Federal Reserve and other issuing banks in tightening monetary policy as inflation grows, in order to defend the Forint against depreciation as well as to cool down the overheating economy. Portfolio points out that as economic growth seems to slow down again in Europe as well as in Hungary, the National Bank was right to preserve the low base rate. As the European Central Bank as well as the Federal Reserve are likely to return to a looser monetary policy, the Hungarian Central Bank will also be able to maintain a low interest rate until the end of next year, or may even cut the Hungarian base rate further, Portfolio suspects.

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