It is the largest rate hike since the financial crisis of 2008. Analysts had expected a move of just 0.5 points on average. It has become significantly more.
The central bank of Hungary surprised the financial markets on Tuesday with an exceptionally strong interest rate hike. The key interest rate will rise by 1.85 percentage points to 7.75 percent, as the central bank announced in Budapest on Tuesday.
It is the largest rate hike since the financial crisis of 2008. Analysts had expected a move of just 0.5 points on average. In addition to the policy rate, the rate on one-week deposits, which had served as the de facto policy rate for some time, was raised to the same level.
The reason for the central bank’s sharp countermeasures is, on the one hand, high inflation and, on the other hand, the weak national currency, the forint. This had repeatedly come under pressure in the past few weeks and repeatedly fell to record lows against the euro. After the current interest rate hike, the forint appreciated somewhat. The Hungarian central bank has been tightening its monetary policy for some time. However, analysts have repeatedly accused the currency watchdogs of not proceeding consistently enough.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
