Hungary central bank raises base rate again
Hungarian rate-setters raised the central bank’s base rate by 15 basis points to 1.80 percent at a scheduled meeting on Tuesday.
The rate-setters continued a tightening cycle started in June, albeit at a slower pace than in the summer months when rates rose 30 basis points each month. Policymakers had signalled in September that the 15 basis point increase that month would be indicative of hikes in the following months.
The Council also decided on Tuesday to raise the overnight deposit rate by 15 basis points to 0.85 percent and the O/N and one-week collateralised loan rates by 15 basis points to 2.75 percent.
The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”. The base rate is paid on mandatory reserves and preferential deposits.
In a statement released after the meeting, the Council said upside risks surrounding the inflation outlook may be more persistent than earlier thought.
“In the decision-makers’ assessment, the inflation outlook continues to be surrounded by upside risks which might prove to be more persistent than earlier expected,”
the policymakers said.
“For this reason, the Council considers it necessary to continue the monthly interest rate tightening cycle,”
they added.
“The Monetary Council will continue the cycle of interest rate hikes until the outlook for inflation stabilises around the central bank target in a sustainable manner and inflation risks become evenly balanced on the horizon of monetary policy,” the policymakers reiterated.
The Council said the “significant” rise in commodities prices in recent weeks “points to a higher inflation path in the short run than expected in September”, when the central bank released its quarterly Inflation Report.
In that report, the National Bank of Hungary put CPI over 5 percent for the rest of 2021, before returning to its 2-4 percent tolerance band in Q2 2022 and stabilising around the 3 percent target in the second half.
“The risks to the outlook for inflation remain on the upside. Rises in commodity and energy prices as well as international freight costs continue to point to a higher external inflationary environment which is more persistent than previously expected. Demand-supply frictions emerging temporarily, and the renewed tightening of labour market capacities in certain sectors, combined with dynamic wage growth, also carry upside risks to inflation,” the Council said.
Read also Is it worth for Hungary to replace forint with euro?
Source: MTI
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2 Comments
Inflation – could you say is Rampant in our Economy at present ?
Certainly from a domestic shopping of produce perspective – markets, supermarkets, all food types, meat and poultry – prices continue to rise.
Governments – you know the “core” of the population – those who do not have disposable income, those from”all stations in life” that live on a budget – are VERY aware of this up-ward Inflatory trend in the Hungarian economy.
Interest rates – again increased – not AGAIN a positive economic indicator that as a country we are on a Solid Financial Footing.
The Forint – Currency – weakening – downward trends being witnessed against the vastness of currencies – it is traded.
We are in the process of a National Election – may 2022, and the picture from an all-inclusive – Economic and Financial perspective, give rise to – Major concerns – the downward trend – these indicators are moving, in the lead up to the National Elections.
Gross Domectic Production – expected in excess of 5%.
2019-2020 – what was it in Hungary – Minus – what figure – 20% to 30% – it was MASSIVE.
The “expected” – 5% – GDP – this current year – it’s a Catch – Up game Economically we are playing, an extremley Challanging one – that at this point of time, we are experiencing a Huge challenge – and to understand and accept this Economic and Financial challenge we are in – the previous 12 months – Negative Massive loss of GDP to the economy of Hungary – must be Recognized.
Inflation – Rise in Interest Rates – Weakening of the Florint – Downward trend of over-priced over Seller Supplied Property Market – not enough buyers to propertys for SALE – downward Trend – difficult times we Face and it will not be STABILIZED in the near Future.
The “weights” of up-ward and downward trends – in the Economic and Financial Markets are winning and Hungary – we are in for another Challenge as are our Wallets.
European Central Bank.
The ‘Strained and Testing ” relationship that Hungary are Factually in with its Membership of the European Union.
Is the situation that Funds are available to Hungary under the provision of funding agreement(s) being a member of the European Union – and because we Hungary – will NOT outline – what we Hungary – intend to do with the Funds – it remains “on hold” in the European Central Bank ???
Hungary – support that the EU needs a “wake up” call and not to inflict it-self on our Soverinty and “other” membership issues – but we need – URGENTLY – these held funds E.U / European Central Bank – held Funds.
Hungary – in the past (6) six weeks – we have borrowed over-seas funds incurring high interest rates – in an attempt to Stabilize our Economy.
Hungary – in past (7) seven weeks we have seen the “need” to increase Interest Rates.
Hungary – we continue to witness esculating price rises – Inflation.
Hungary – if the E.U are saying you can – there YOURS to have – the funds at present held in the European Central Bank – on the Condition, and this is WHY – these funds remain HELD – and have for TIME – but Hungary – you TELL us – HOW – you are going to use them – Disburse them – what purpose and to WHOM – will they be Disbursed.
Hungary – is it past a “due by date” – all the on-going downward trends in our Economic and Financial Landscape – to TELL – reveal to the E.U / European Central Bank – what we INTEND to do with these Held Funds.
Whats to HIDE ???
Is that the conundrum – it signing the Relaese of Funding Document ?
Hungary – we can’t continue on this agenda / Policy at present in the Financial & Economic Operation and Management of our Economy – the daily running and operation of our Country.
Government borrowings – come back HARD in the face of Citizens – who from there pockets PAY – for Governmental Borrowing.
Interest paid by a Government on external Fund borrowings – are at a higher leval than those rates in the “normal” financial institutions like Banks.
The time for a NEEDED – Mea Culpa – by the Government of Hungary – with the European Union.
If we DON”T – the deepening un-certainties in our Economy – people HURTING financially – there quality of life – extending Social Inequality in our Society – will Worsen – Rapidly.