Rate Decision - MNB Omits Reference To Easy Policy

The MNB left interest rates unchanged at its regular interest rate setting meeting today, and left intact its other tools as well.

Also, the MNB has made some changes to the press release following the decision. The most important being that the current communication discontinues the earlier press releases’ habit to refer to the preference of easy monetary policy.

Instead, they stressed the volatility in the headline and the continuous rise in the underlying inflation pressure. The MNB made it clear that the evolution of core inflation pressure has the most important impact on the evolution of the MNB’s monetary policy, the evolution of the ECB monetary policy being only of secondary importance.

The rise in the core inflation net of taxes will be judged by the MNB n the basis of its indication regarding the sustainable achievement of the inflation target (3% +- 1pps).

The MNB reiterated its preference of a change in the non-conventional measures first during the early phase of a future tightening.

 

The MNB has revealed the forecasts from its brand new inflation report (to be unveiled on Thursday). They lifted GDP growth for this year to 4.7% from the previous 4.4%, leaving the 2019 forecast at 3.5%, and the 2020 forecast at 3%. The CPI forecast went through a more modest amendment: raising this year’s forecast to 2.9% (from 2.8%), and lowering next year’s forecast from 3.1% to 3%.