2 December 2002

At its meeting held on 16 December 2002, the Monetary Council has reduced the central bank base rate by 50 basis points, from 9.00% to 8.50%. The decision will take effect from 17 December 2002. The recent appreciation of the forint exchange rate has led to a tightening of monetary conditions. The rate reduction by the ECB on 5 December has added to excess returns earned on forint-denominated investments. In addition, the agreement concluded on the criteria of Hungarian accession to the European Union will likely reduce the required risk premium on forint-denominated investments. In the Monetary Council's evaluation, the current rate reduction will not impede the implementation of MNB's inflation objectives.