Hungary: Raises one-week deposit rate to 3.1% (upd)

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LAST UPDATE 11:26

Hungary’s central bank has raised its overnight deposit rate to 3.1% from 2.9%, continuing a series of interest rate hikes as it tries to curb rising inflation.

This is the fifth increase in interest rates in less than three weeks.

The central bank has raised its one-week deposit rate by a total of 130 basis points during the tightening period in response to short-term market risks.

The increases have supported the forint, which reached new lows at 327 against the euro last month, amid concerns about the economic impact of the new coronavirus wave.

The forint extended its gains to a three-week high of 361 on Thursday, following a new rate hike from 361.90 before the announcement.

On Tuesday, in a meeting that did not concern the setting of interest rates, the bank raised the interest rate on a guaranteed loan by 105 basis points to 4.1% and the overnight deposit rate by 45 basis points to 1.6%, widening the corridor interest rates.

The bank has pledged to continue monetary tightening as needed and spoke of a more “extended and long-term” tightening to consolidate its inflation expectations.

Yesterday, the governor of the central bank Gyorgy Matolcsy, stated that the bank will gradually abolish the QE of 3.4 trillion. Forinion, adding that interest rate hikes alone will not be enough to contain higher-than-expected inflation.

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Source From: Capital

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