Hungary’s central bank on Tuesday retained its key interest rate at a record low for a seventh month in a row amid falling prices and improving growth.
The Monetary Council of the Magyar Nemzeti Bank maintained the key rate at 2.10 percent. The decision was in line with economists’ expectations.
“In the Council’s judgement, Hungarian economic growth is likely to continue,” the bank said in a statement. “Inflationary pressures are likely to remain moderate for an extended period.”
In January, consumer prices fell for a fifth consecutive month, down 1.4 percent annually. In April last year, prices decreased for the first time since 1968. However, the core consumer price index climbed 0.7 percent from a year ago.
Meanwhile, economic growth improved to 3.4 percent in the fourth quarter from 3.2 percent in the previous three months. Growth for the full year 2014 was 3.5 percent versus 1.5 percent in 2013.
“The current level of the central bank base rate yet remains consistent with the medium-term achievement of price stability and a corresponding degree of support to the real economy,” the bank said.
“If the assumptions underlying the Bank’s projections hold, achieving the inflation target points in the direction of loose monetary conditions for an extended period.”
The Monetary Council will consider the need for possible further easing of monetary conditions in view of the March Inflation Report projection, it added.
The bank is set to release the abridged minutes of the latest policy meeting on March 11.
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