⁍ Hungary’s central bank left interest rates on hold on Tuesday, as expected.

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⁍ Bank slashed its economic projection for this year, forecasting a 5.1% to 6.8% contraction from a previous prediction of moderate growth.

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⁍ Bank needs to walk a fine line between supporting an economy hit by the coronavirus and keeping a lid on inflation.

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– Hungary’s central bank left interest rates on hold today, as expected, and struck a hawkish tone with a warning it would be ready to use its policy tools if persistently higher inflation warranted such action, Reuters reports. Even as the bank slashed its economic projection for this year, forecasting a 5.1% to 6.8% contraction from a previous prediction of moderate growth, it dropped an earlier reference to additional economic stimulus from its post-meeting statement. The bank, led by Governor Gyorgy Matolcsy, an ally of Prime Minister Viktor Orban, needs to walk a fine line between supporting an economy hit by the coronavirus and keeping a lid on inflation, which has put the forint currency under pressure. “One or two strong references to the inflation situation, complemented by a message that the NBH doesn’t have the appetite to ease further, could be enough,” economist Peter Virovacz at ING said ahead of the decision. “With that, the central bank can buy precious time until inflation drops back closer to the middle of its 2% to 4% target range.”