Barnabás Virág: continued disciplined anti-inflation policy is justified

By: Trademagazin Date: 2025. 01. 29. 11:45

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Global investor sentiment has been characterized by a high degree of uncertainty and volatility since the December interest rate decision, and a disciplined, anti-inflationary and cautious monetary policy is still necessary, said Barnabás Virág, Vice President of the Magyar Nemzeti Bank, on Tuesday, during an online background discussion following the meeting of the Monetary Council of the MNB.

According to his explanation, at the first meeting of the council this year, a single option was discussed and a unanimous vote was cast to maintain the interest rate level. Geopolitical tensions, the volatile financial market environment and the risks surrounding the inflation outlook justify the maintenance of tight monetary conditions, underlined Barnabás Virág.

The base rate has been unchanged for 4 months, and the possibility of an interest rate cut has been removed from the agenda, the Vice President said in response to a journalist’s question.

In the coming period, the results achieved in the areas of inflation and price stability will be guiding principles for the central bank, he said. In addition to the risk aversion towards emerging markets and the current inflation risk outlook, the base rate may remain at its current level for a longer period of time, he added.

According to his explanation, the volatility of global investor sentiment was mainly driven by geopolitical developments, news related to US tariff increases, and expectations regarding the future interest rate paths of major central banks.

The expected interest rate paths of major major economies are surrounded by significant uncertainty. Risk aversion towards emerging markets and the ongoing geopolitical tensions have increased the upward inflation risk in recent months, he emphasized.

He also mentioned that in December last year, domestic inflation and core inflation increased beyond analysts’ expectations, reaching the upper end of the central bank’s forecast range, at 4.6 percent.