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Press release on the Monetary Council’s meeting of 8 December 2008

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8 December 2008

At its meeting on 8 December 2008, the Monetary Council reviewed the latest economic and financial developments. Deviating from its normal decision-making schedule, the Council reduced the central bank base rate by 50 basis points from 11.00% to 10.50%, with effect from 9 December 2008.

The decision to reduce the base rate has been justified by the significant change in circumstances leading to the 300 basis points increase at the Council’s special meeting on 22 October 2008. Last week, European central banks decided to reduce key policy rates, as risks to both real economic performance and inflation were clearly on the downside. There has recently been an improvement in sentiment towards the Hungarian economy, and uncertainty related to external financing have diminished significantly, due to the international loan package, the announced budgetary adjustment measures and the adoption of the law introducing a ceiling on fiscal expenditure. In the Monetary Council’s view, the reduction in the central bank base rate has been facilitated by the current international environment and justified by the domestic economic outlook.

The abridged minutes of today’s meeting will be published at 2 p.m. on 19 December 2008.

MAGYAR NEMZETI BANK

Monetary Council