Hungarian Central Bank Raises Base Rate to 1.8 %

  • 20 Oct 2021 7:45 AM
  • Hungary Around the Clock
Hungarian Central Bank Raises Base Rate to 1.8 %
The MNB monetary council increased the base rate from 1.65% to 1.8% at its meeting on Tuesday, in line with expectations.

The council increased the overnight deposit rate from 0.7% to 0.85% and the overnight lending rate similarly by 15 basis points, from 2.6% to 2.75%.

The statement issued by the monetary council contained more hawkish messages than before, but they still remained only hints, Portfolio adds.

The absence of the phrase “in smaller steps” may suggest higher rate hikes in the future, returning to the 30-basis-point steps taken in the summer, the website adds.

Monetary austerity will continue in 2022, MNB deputy governor Barnabás Virág told a press conference after the rate hike.

Inflation may be higher than forecast in the MNB’s inflation report in September, because of soaring energy prices, he added.

Analyst Gergely Suppan of Takarékbank observed that the forint reacted to the rate hike with a slight weakening, as soaring inflation could have justified an even larger interest-rate increase.

Inflation will rise further in the months to come and may hit 7%, he added.

Press release on the Monetary Council meeting of 19 October 2021 available here.

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