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Magyar Nemzeti Bank maintains base rate at 6.50%

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1 At its meeting on 28 April 2003, the Monetary Council of the MNB discussed the first version of the Quarterly Report on Inflation, to be issued on 12 May.

2 The Council considered the latest economic and financial developments and left the central bank base rate unchanged at 6.50%.

As a result of previous monetary tightening, the first quarter of 2003 saw a significant decline in the inflation of the price of goods and services which are controlled by monetary policy, simultaneously with a pick-up in firms’ efforts to adjust their pricing behaviour. Disinflation has gained further momentum due to a sharp fall in oil prices, as global economic activity is forecast to remain subdued this year.

At the same time, disinflation appears to be hampered by slower-than-expected adjustment of wages and fiscal policy’s smaller-than-expected contraction of demand. Wage inflation continues to exceed the rate of productivity growth, posing a threat of further worsening in competitiveness, rising unemployment and a slowdown in economic growth.

Developments in the past few months have slightly raised the probability of achieving the 3.5±1% inflation target in December 2004. However, due to buoyant growth in domestic demand, there remains a significant risk that inflation exceeds the target range.

3 The Monetary Council set the dates for its scheduled meetings to be held on Mondays in 2003 H2 as follows:

7 July, 21 July, 4 August, 18 August

1 September, 22 September, 6 October, 20 October

3 November, 17 November, 1 December, 15 December

4 The dates of electronic publication of the Quarterly Report on Inflation in 2003 H2 are 2 p.m., Monday, 18 August 2003 and 2 p.m., Monday, 17 November 2003. Following electronic publication of the Report, the Chairman of the Monetary Council will hold a press conference to present the Monetary Council's statement at 2:30 p.m. The technical consultation with the Economics Department staff following publication of the Report will be held on the set dates at 3 p.m.

18 August 2003

– Electronic publication of the May 2003 Inflation Report at 2 p.m.

– Publication of the Monetary Council's statement at 2 p.m.

– Press conference by the President at 2:30 p.m.

– Technical consultation held by the Economics Department at 3 p.m.

17 November 2003

– Electronic publication of the November 2003 Inflation Report at 2 p.m.

– Publication of the Monetary Council's statement at 2 p.m.

– Press conference by the President at 2:30 p.m.

– Technical consultation held by the Economics Department at 3 p.m.