The Hungarian National Bank (MNB) raised the base interest rate 0.3%, from 1.8% to 2.1%, to take effect on Wednesday, writes 24.hu.
Most analysts expected some monetary tightening, but there were also some who saw a need for an increase of up to 1 percentage point due to higher inflation. The average inflation rate jumped to 6.5% in October, with even higher rates likely in November-December.
With inflation so high and interest rates low, it is no surprise that the Hungarian forint has hovered at near-historical lows recently, says the business news site.
Money markets were subsequently disappointed in MNB’s 0.3% increase, as analysts had planned on a somewhat higher hike in the base interest rate.
Following the Central Bank’s decision on Tuesday, the forint quickly fell from 364 to 366.8 against the Euro, close to its historical low of 369.8 Ft. Against the dollar, the Hungarian currency was pegged at 322.5 Ft.