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Hungary central bank holds key rates as growth weakness looms

The Hungarian central bank left its key rates unchanged amid an expected slower economic growth.

Magyar Nemzeti Bank maintained its base rate, overnight collateralized lending rate and one-week collateralized lending rate at 0.90%, and the overnight deposit rate at negative 0.05%.

"The monetary policy stance will continue to be accommodative, economic agents' financing costs will be favourable," the central bank said in a statement.

The Hungarian economy, which grew 4.9% in the second quarter, is projected to expand at a weaker pace in the coming months amid a slowdown seen in the wider European region. The country's GDP is forecast to rise 4.5% in 2019 and by 3.3% in the succeeding two years.

On the price front, the central bank warned that inflation "continues to be volatile" and that downside risks have risen as a result of weakening external activity.

Inflation and core inflation came in at 2.8% and 3.9%, respectively, in September. The central bank's inflation target is 3%.