The Hungarian MPC left both its three-month and overnight deposit rates on hold today but the Council announced unconventional measures to ease policy, including interest rate swaps and a mortgage bond purchase programme. Further details of these measures will only be provided in December, but the big picture is that moves to loosen policy are at odds with mounting evidence that economic slack is diminishing rapidly. There is a growing risk of a destabilising build-up in macroeconomic imbalances and/or a sharp rise in inflation over a 2-3 year horizon.
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