Hungary Central Bank Raises Rate 50bps to 7.00%

The Magyar Nemzeti Bank hiked its central bank base rate by another 50 basis points to 7.00% from 6.50% to help boost the forint.  The Bank said: “The Monetary Council decided to raise the base rate by 50 basis points in view of increased perceptions of the risks associated with the economy and upside risks to inflation. If risk perceptions and the outlook for inflation deteriorate significantly further, it may prove necessary to raise interest rates again.”

The Magyar Nemzeti Bank previously also hiked the rate 50 basis points at its November meeting, after last raising it 25 basis points in January this year.  Hungary reported annual inflation of 3.9% in October, up from 3.6% in September and August, 3.1% in July, 3.5% in June, 3.9% in May, and 4.7% in April.  Hungary’s Central Bank has a medium term inflation target of 3%, while the Bank expects inflation to average 3.9% this year.