Actual: 6.00 %
Consensus: 6.00 %
Previous: 6.00 %
The MNB meeting in July only marginally differed from the previous one. Interest rates were kept on hold, as all the market had expected. The press conference did not surprise either; the meeting result is neutral for financial markets.
The bank only discussed "no change" option. According to the MNB, current level of interest rates should bring inflation back to the 3 pct target, but the rates need to stay there for a longer period of time. Governor Simor said there are no signs of improvement in domestic demand. The demand is projected to stay week also in 2012; one of the negative factors is the continuing rally of the Swiss franc.
The Eurozone debt crisis is considered the most important risk factor for interest rates and success of the recent measures will influence central bankers´ future decisions.
Given the weak demand and the slowing growth of both consumer and producer prices, the threat of European debt crisis is likely the key factor preventing the MNB from easing its policy. Interest rates are expected to stay unchanged also in the following months. But if there is an improvement in the debt issue, a rate cut will be possible in the 4Q.