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Hungary: New interest rate hike by the central bank

Hungary’s central bank has raised interest rates again in a bid to curb rising inflation, although some analysts say a move by the Orban’s government to raise mortgage rates could undermine its efforts.

Hungary’s central bank has raised its one-week deposit rate by 20 basis points to 3.8%, extending the range of interest rate hikes as it seeks to reduce inflation.

Yesterday, however, Prime Minister Orban stressed that the government would “freeze” housing rates for a period of six months from January, to protect households from higher borrowing costs.

The bank had raised the key interest rate by 30 basis points, to 2.4% last week, the highest level since May 2014, and pledged further interest rate hikes next year.

The’s one-week deposit rate, which the bank uses to combat short-term market volatility, is now 305 basis points above the June level when it began tightening policy, a move that reflects Budapest’s interbank rates.

Inflation in the country is at a high of 14 years, at 7.4%, higher than estimates, due to the prices of fuel, alcohol and tobacco.

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Source From: Capital

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