Hungarian central bank rate-setters hiked the base rate by 100 basis points to 5.40 percent at their regular meeting on Tuesday, while also expanding the two sides of the interest rate corridor by the same ratio.
In a statement released after the meeting, the Council said the war in Ukraine has “posed a much higher risk than usual” to the outlook for inflation. “Mitigating increased fundamental inflation risks and driving expectations appropriately make it necessary to continue the base rate tightening cycle in the coming period,” the Council said, reiterating its policy position.
The Council also affirmed the central bank’s commitment to ensuring market stability, in addition to its primary objective of price stability.
“If necessary, the [NBH] stands ready to intervene using every element in its monetary policy toolkit to ensure financial market stability,” the rate-setters said.
The Monetary Council will continue the cycle of interest rate hikes until the outlook for inflation stabilises around the central bank target and inflation risks become evenly balanced on the horizon of monetary policy, they added.
The policy makers said the base rate will “gradually catch up” to the level of the central bank’s one-week deposit facility “in the coming months”, adding that the NBH “continues to stand ready to respond quickly and flexibly by setting the interest rate on the one-week deposit instrument if warranted by short-term risks in financial and commodity markets”. The Council noted that the central bank “normally determines” the one-week deposit rate “on a monthly basis”.
Addressing an online press conference after the meeting, NBH governor György Matolcsy said Hungary needed to continue the fight against inflation until it is brought back down to 3 percent. He said inflation could start slowing back down to the central bank tolerance band next year.
Matolcsy said the foundations for another tax reform should be “green, digital and concentrate on turnover-based taxes”. He said the central bank is drafting a two-year “economic stabilisation” programme that it will recommend to the government in the coming weeks.
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Source: MTI
2 Comments
Natural gas is not traded on any stock market but on the world’s commodity markets. See “the gas Hungary is getting is even more expensive than the stock market price”.
Mr. Matolcsy is incorrect: taxes should not be “turnover-based” as that is regressive and hurts those the most who are least able to afford it. A graduated income tax should be introduced, with a highest bracket of 50%.
The CORE componentry – used and repected – UNIVERSALLY – to access and Analysis – the performance of a countrys Economic and Financial position – remain in a SRONG downward trend in Hungary.
Commented throughout a period of the past 18 months, this downward trend – has been the pattern, the Economic & Financial position, that Hungary has been in.
The downward trending – is compounded with massive increasing challenges to the Economic & Finacial position of Hungary – through its – Dry up of Funding – through its “Questionable” on-going Membership, of the European Union.
In the challenges the Government are Facing, and will face in the immediate future, they are not through Inflation nor the NEED to continuosly increase interest base rates – the massive PROBLEMS are deeper and of greater penertration – that is cutting / slicing open and revealing – the Serious state and position, the Economic & Finacial outlook, is for Hungary.
The Fidesz Party under the Leadership of the current Prime Minister of Hungary – Victor Orban – set over a decade past, the CORE of an Economic & Financial “BluePrint” – that has not post February 2020 – accepted – nor come up to speed, and REALIZED, that post February 2020 – the World has changed and the Management, the way of handling the Economic & Financial Balance Sheet of a Country – that VISIONARY Governments needed to or – to CHANGE.
Hungary – has FAILED – to readjust or realign – to the new Global World Economy – in its way of NEED to hold its Economy – in a position that could be said – STABLE.
February 2020 on – the Russian War on the Ukraine – the devastation caused to the quality of life and throughout the “Broadsheet” business and company operations in Hungary – post February 2020 – the Government, has not – ADJUSTED nor ALIGNED it-self – to the new world Economically & Financially – and this continues to be – a MASSIVE load of pressure – that is continuing to drive the Hungarian Economy in a Downward trend.
Foreign Currecy Markets – strongly indicate – that the Forint – is MASSIVELY – out of Favour, and does give on-going indications it’s – NADIR – the lowest or most unsuccessful point of a situation – is distanced from downward journey.
Hungary – interesting and challenging times presently – the immediate and long term – in its Economic & Financial existance.
The picture darkens and the deepening Black Hole – the loosers are the people the citizens of Hungary – SADLY.