August 14, 2022
  • August 14, 2022

Hungary’s central bank raises key rate by 30bp

By on June 22, 2021 0

Hungary’s central bank raised its policy rate for the first time in nearly a decade, with inflation remaining above target.

The Monetary Council of Magyar Nemzeti Bank decided on Tuesday to raise the benchmark base rate by 30 basis points to 0.90% from 0.60%.

The overnight central bank deposit rate was kept at -0.05% and the weekly guaranteed loan rate was kept at 1.85%.

In May, consumer price inflation held steady at 5.1%, well above the central bank’s tolerance range of 2% to 4%.

The scale of inflationary pressures resulting from shortages of goods and the reopening of service sectors clearly makes the MNB uncomfortable, and it now feels the need to start tightening its policy to deal with these risks and protect expectations. inflation, Liam Peach, economist at Capital Economics, said.

With the recovery expected to strengthen and inflation likely to rise further in the coming quarters, further interest rate hikes are likely in the second half of this year, the economist added.

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