No surprise from the last Monetary Council rate-setting meeting chaired by outgoing governor Matolcsy

HUNGARY - In Brief 25 Feb 2025 by Istvan Racz

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As governor Matolcsy is set to leave the MNB on March 3, today's was the last regular monthly rate-setting meeting chaired by him in the Monetary Council. There was absolutely no surprise caused by the Council on this occasion: the base rate was kept at 6.5%, the interest rate corridor at 5.5-7.5%, all unchanged. Mr. Matolcsy did not appear publicly on this occasion; a press conference was held by vice governor Virág after the meeting, as usual. There was nothing special in the Council's communiqué or in Mr. Virág's presentation; both were kept remarkably low-profile. At the press conference, Mr. Virág made no comment whatsoever on the forthcoming change of the MNB management, and he was not asked about any related detail either. Maybe there was a preliminary agreement reached on this with those invited, leaving all announcements for the incoming new governor in this regard. Regarding content, the Council unsurprisingly saw the potential for a higher inflation path for this year than earlier, in view of the disappointing January CPI data. Mr. Virág specifically pointed at the prices of food, fuel and services as the main explanatory factors. Somewhat curiously, he did not make any reference to the fact that the services sub-index was negatively affected by a significant one-off item in January, possibly not to reduce the strength of the main message. However, he still saw the disinflation process to restart before the end of Q1, even though he refrained from providing any specific forecast this time. This was in order, we think: anyway, the Q1 inflation report, with the Bank's new forecast, is due in late March only. Asked about Mr. Pleschinger's early February remark ...