The central bank of Hungary raised its one-week deposit rate by 50 basis points to 7.75% as it upgraded its estimates for tax-adjusted inflation, the preferred measure of persistent price trends, to an impressive 13 % -14% this year.
The country’s central bank raised its key interest rate by 185 basis points to 7.75% on Tuesday, the biggest increase since the start of the financial crisis in 2008, to stimulate the forint.
On Thursday, it followed with a 50 basis point increase in the one-week deposit rate, which aims to combat short-term volatility in the market, closing the spread between the two interest rates respectively with its previous commitment.
The central bank also upgraded its structural inflation estimates from 7.9% to 9.4% for 2022, while forecasting a decline to 6.6% -82% next year, which remains above the target. for 2% -4%.
He predicts that the increase in gross wages in the private sector will be 13.2% -13.8% this year, and 8.8% -9.9% next year, which he said could create further upside risks to inflation.
“Once there is strong competition for skilled labor in all sectors, strong wage growth is likely to continue, which increases the risk of inflation,” the central bank said.
The bank upgraded its inflation estimates for 2022 to 11-12.6% from the previous ones by 7.5% -9.8%, while it upgraded its estimates for 2023, although the government has imposed a ceiling on fuel prices and household energy bills.
Source: Capital
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