Hungarian central bank surprises everyone with another drastic base rate hike
Hungarian central bank rate-setters on Tuesday raised the base rate by 125 basis points to 13 percent.
The rise followed a 100 bp hike at the policy meeting in August.
The Council also decided on Tuesday to raise the O/N deposit rate by 125 basis points to 12.50 percent, and the O/N and one-week collateralised loan rates by 125bp to 15.50 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.
The Council said it has decided to end its cycle of base rate hikes,
as interest rate conditions have become sufficiently strict, which it said ensured the achievement of the inflation target. The Council also said it will shift its focus to tightening liquidity and further enhancing monetary transmission, for which the central bank could decide on further measures in the future.
György Matolcsy, the governor of the central bank, told a press conference that the end of the Monetary Council’s cycle of base rate hikes did not mark the end of the fight against inflation. The central bank will now continue its monetary tightening by focusing more on other tools at its disposal, he said.
He said inflation was set to keep rising this year before peaking in the first half of next year. It will then start slowly decreasing and approach the central bank’s target rate in 2024, Matolcsy added.
As we wrote yesterday, Forint is at a new low against the dollar
Very short article with an alarming message: “inflation will keep rising … slowly decreasing and approach the central bank’s target rate in 2024”. Well – the base rate was 18 percent at a point in Russia, and they are our Politicians big example !
‘Surprises everyone”.
Predictions from those that KNOW – inside Hungary, throughout Europe and Globally, the on-going decline – trending lower and weakening in performance, in all the componentry of the Economic & Financial “landscape” of Hungary, the possibility, that Interest Rates in Hungary could “test” 20%.
Imprudent – Irresponsible – disturbing and WRONG – to print the word SURPRISE.
If you had taken out a Loan on a property in Hungary, in the past say (24) twenty four months – kept abreast of the Hungarian “collapsing” economy, and ALL other CHALLENGES it factually is facing, the word SURPRISE – would – is not – what is being used, for those with relatively NEWISH borrowed funds.
What has the trend been in Hungary – just focus on the last (12) twelve months – the TREND certainly, has not been, that INTEREST rates have SUBSIDED – the borrowing of Funds got CHEAPER.
“As predicted – expected through the worsening of the Economic & Financial in Hungary – Base Rate Interest on Borrowed Funds has Risen to 13%.”
Headline, respectfully like previous paragraph – captures reader attention, rather than a SURPRISE.