The Magyar Nemzeti Bank is capable of exercising its impact on the economy chiefly by influencing exchange rates and inflationary expectations. Changes in the stance of monetary policy and the evolution of the exchange rate are linked by the uncovered interest rate parity principle.
It is important to note that, even with the increase in the stock of foreign currency loans, the tightening of monetary conditions has a downward effect on inflation. The exchange rate channel operates efficiently through the price of imported inputs used in the production process and imported consumer goods.