The monetary policy of the central bank allowed a significant cut in interest rates in the first quarter of 2000. As a result, and also due to overall favorable economic trends, the loan portfolio of businesses is likely to grow. By the end of March business sector interest rates within the year fell to 12.60% with deposit rates down to 9.40%. The following months are expected to see a further drop – credit rates could be around 12% and deposit rates around 9% by the end of September.
The Hungarian National Bank’s (MNB) attempts to stabilize yields were successful in the first quarter, one of the primary means being 3-month MNB bonds. The resolute statements issued by both the central bank and the Ministry of Finance had a firm impact and kept expectations of wider currency band movements back. The Forint’s move away from the strong end of the currency band proved lasting and thus foreign demand went down. Starting April 1, the monthly rate of currency devaluation slowed to 0.3%. The 266.4 HUF average rate for 1 USD could go up to 290 by the end of September; while the 257.1 HUF rate for 1 euro to 262 HUF.
Corporate deposits at the end of the first quarter amounted to 1175 billion HUF with more than 80% denominated in Forints. Household deposits were more than 3000 billion HUF, with 2879 billion in private deposits at financial institutions.
The compound domestic loan portfolio at the end of the first quarter was 6014 billion HUF, almost 300 billion less than the year before. Of this total corporate loans amount to 2509 billion HUF, almost 500 billion more than in 1999. Household loans have also grown in the same period from 371 billion to 502 billion HUF.
