Explaining Tuesday’s base rate cut, György Matolcsy, governor of the National Bank of Hungary (NBH), told a press conference after the Monetary Council’s meeting that the central bank had to make decisions for the economy to take the expected jumpstart from the third quarter.
After the 2.2% growth rate in the first quarter, the Hungarian economy could have contracted by an annual 7% in the second quarter, according to preliminary NBH estimates, Matolcsy said. The aim is to make the business environment even more supportive, Matolcsy said. Also, the NBH intended to signal that it considers the base rate important and that it has room for manoeuvre, he added. Among the NBH’s main goals, price stability and the stability of the financial system have been preserved, and an additional goal is to support the government’s economic policy, he noted. Matolcsy also said that the “hard part” of dealing with the epidemic was over for Hungary, saying that the country had “won” the first phase of managing the outbreak. Citing a Hong Kong-based analysis firm, Matolcsy said Hungary was in fourth place in the European Union when it comes to the handling of the pandemic, adding that this constituted a “victory”.
Deputy governor Barnabás Virág told the same press conference that the base rate cut was a “symbolic” step, a “discrete decision”, and not a decision on the start of a cycle.