Hungary central bank raises rates for fifth time in under three weeks
Reuters
Published Dec 02, 2021 09:33
BUDAPEST (Reuters) - Hungary's central bank raised its one-week deposit rate by 20 basis points to 3.1% at a weekly tender on Thursday, its fifth rate rise in less than three weeks as it tries to curb rising inflation amid a strong economic recovery.
The bank has raised its one-week deposit rate a combined 130 basis points during its tightening spree in response to short-term market risks.
The rate hikes have supported the forint, which hit new lows of 372 versus the euro last month amid worries over the economic impacts of a new wave of COVID-19 cases. The forint extended gains to a three-week high of 361 on Thursday after the fresh rate hike from 361.90 before the announcement.
On Tuesday, at a non-rate-setting meeting, the bank raised its collateralised loan rate by 105 basis points to 4.1% and the overnight deposit rate HUODPO=ECI by 45 basis points to 1.6%, widening its interest rate corridor.
And at its rate-setting meeting last month, the bank raised its main base rate by 30 basis points to 2.1%.
The bank has pledged to continue its monetary tightening as long as necessary and flagged a "more extensive and longer lasting" tightening to anchor inflationary expectations.
On Wednesday, National Bank of Hungary Governor Gyorgy Matolcsy said the bank will phase out its 3.4 trillion forint quantitative easing programme soon, adding that rate increases alone were not enough to rein in higher-than-expected inflation.
The next regular policy meeting is due on Dec. 14 when the bank will publish updated economic forecasts, which Matolcsy said would show average inflation running at around 5% both this year and next - well above the bank's target range.
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Written By: Reuters
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