Hungary’s central bank raised its key interest rate by 185 basis points to 7.75%, stepping up the rate as the forint fell to a record low this week as inflation soared.
The forint, which fell to a new low of 404.5 against the euro, stood at 397.75 against the euro.
Average estimates spoke of a 50 basis point increase to 6.4%, with three economists expecting an increase of 100 points.
This is the largest increase in interest rates since October 2008, at the beginning of the global financial crisis, when it had raised interest rates by 300 basis points.
The forint has remained lower against the euro by 7% since the beginning of the year, despite the central bank raising its key interest rate by 715 basis points last year, driven by high deficits, corporate taxes and the funding dispute with European Union.
The central bank is expected to revise its 2022 inflation estimates again today, after Deputy Governor Barnabas Virag warned that March inflation targets of 9.8% this year no longer seem viable.
Source: Capital
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