The Hungarian central bank (NBH) rate-setters raised the base rate by 100 basis points to 10.75 percent at a policy meeting on Tuesday.
The NBH Monetary Council had raised the base rate by 200 basis points to 9.75 percent just two weeks earlier, taking the extraordinary measure at a non-rate-setting meeting to keep the key rate in tandem with the one-week deposit rate. The Council also decided on Tuesday to raise the O/N deposit rate by 100 basis points to 10.25 percent and the O/N and one-week collateralised loan rates by 100 basis points to 13.25 percent. The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”. The base rate is paid on mandatory reserves. “The further rise in inflation and persistent inflation risks warrant the decisive continuation of the tightening cycle,” the Council said in a statement released after the meeting. “The [NBH] continuously monitors developments in financial market risks as well and stands ready to intervene in a decisive manner using every instrument in its monetary policy toolkit, if necessary,” the policymakers added. The Council reiterated that the tightening cycle will continue “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”.
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