A Third Central Bank Interest Rate Hike in Hungary

August 24, 2021

As was expected, the National Bank of Hungary’s base rate was lifted another 30 basis points at this month’s review of monetary policy. Such follows similar hikes made in June and July and brings the rate level to 0.90%, its highest level since mid-2015. In 2020, two cuts of 15 basis points each had been done. The backdrop for the rate’s trend reversal has been an acceleration of CPI inflation to above-target territory. The target is 2-4%, and officials are determined to return there in the medium term. According to a statement released today, “the Hungarian economy has successfully restarted. In light of the September Inflation Report, the Monetary Council will perform a comprehensive assessment of the results achieved by the cycle of interest rate hikes, and will identify risks to the inflation outlook. 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.”

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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