Tuesday, December 20, 2011

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.

The Hungarian economy grew at an annual rate of 1.5% in the June quarter, compared to 2.4% in the march quarter, and 1.9% GDP growth recorded in the December quarter last year.  The Hungarian forint (HUF) has lost about 12% against the US dollar this year, the USDHUF exchange rate last traded around 230



  1. If hungary can't keep its currency strong then they're faarked, half the people got mortgages in CHF and EUR, this could get ugly... not a nice picture given the rest of the troubles all around Europe.

  2. It seems to be the case but maybe not. Watching key levels helps in this regard.