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Hungarian central bank keep interest rates unchanged

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Hungarian central bank keep interest rates unchanged

Hungary's central bank decided to keep its interest rates on hold in line with expectations, unruffled by rising inflation and a global trend toward monetary tightening, media reported.

The monetary council of Magyar Nemzeti Bank kept the base rate at 0.90% and the overnight deposit rate at negative 0.15%. The interest rate conditions will take effect on Dec. 20.

The forint traded at 313.18 after the bank's meeting concluded while the yield on the 10-year benchmark bond traded at a record low of 2.02% on Dec. 19, down 4 basis points from Monday's fixing on expectations that the central bank will unveil more details of its monetary policy schemes, Reuters reported.

Inflation picked up to 2.5% in November from 2.2% in October. November's reading is still below the bank's 3% target, which has a 1 percentage point tolerance range on either side, Business Recorder said.

The central bank has used unconventional tools in a bid to boost liquidity in domestic markets. Earlier this month, it announced plans to buy mortgage-backed securities starting in January in order to influence longer-term lending to home buyers, Bloomberg News said. It also raised the surplus liquidity it provides to the banking system to 1.506 trillion forints at foreign currency swap tenders dated Dec. 11 from 1.456 trillion forints a week ago, Reuters reported.