Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Hungarian cenbank slows pace of tightening, plans more hikes to curb inflation

EconomySep 21, 2021 10:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The Hungarian national flag and the flag of the European Union fly on the building of the National Bank of Hungary in Budapest January 10, 2013. REUTERS/Laszlo Balogh

By Krisztina Than and Gergely Szakacs

BUDAPEST (Reuters) -Hungary's central bank raised its base rate on Tuesday by a smaller-than-expected 15 basis points to 1.65% and pledged similar hikes in the coming months to curb inflation, while it also reduced its bond purchases further.

The National Bank of Hungary, which in June became the first in the European Union to start raising borrowing costs, has now delivered four rate hikes in a row. The previous three, over the past three months, had each been of 30 basis points.

The bank said risks to the inflation outlook remained on the upside due to an increase in commodity prices and freight costs, and also rising wages as Hungary's labour market tightens amid a strong economic rebound from the pandemic.

"The inflation outlook and the risks surrounding it clearly warrant the continuation of the ongoing, monthly interest rate tightening cycle," the Monetary Council said in a statement.

Deputy Governor Barnabas Virag said the bank would continue with 15-basis-point rate increases on a monthly basis in the fourth quarter, and would next review its policy approach in December when its new inflation forecasts are due.

In further moves to tighten policy, the bank decided to phase out its foreign-exchange swap facility providing forint liquidity and said its weekly bond purchases would fall to 40 billion forints ($133 million) from 50 billion from next week.

"If warranted for the maintenance of market stability, the NBH will stand ready to temporarily raise the volume of weekly purchases at any given time," it added.

The bank raised its inflation forecasts for both 2021 and 2022.

FORINT STEADIES

Tuesday's rate hike was smaller than the median forecast of analysts for a 25-bp rate increase in a Reuters poll.

The forint initially eased past 354.50 from around 353 before the rate decision, but regained some ground after the bank's comments, firming to 353.50 by 1343 GMT.

The forint has weakened amid global market jitters from around 349 at the time of the August rate meeting - a depreciation that could add to inflation pressures.

Like much of the world, Central Europe is suffering inflation pressure due to supply shortages and higher energy costs, but its economies are also gaining speed and labour markets are tightening, putting upward pressure on wages.

Hungary's August annual headline inflation was 4.9%, overshooting the central bank's 2-4% target range as the economy recovers faster than expected.

The Hungarian bank also raised its overnight deposit rate by 15 basis points to 0.7% on Tuesday.

($1 = 301.0700 forints)

Hungarian cenbank slows pace of tightening, plans more hikes to curb inflation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email