| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers M > Headlines for Magyar Nemzeti Bank > News item |
Hungary raises central bank base rate by 50 bps to 6½%
By Angela McDaniels
Tacoma, Wash., Nov. 29 - The Monetary Council of Hungary's Magyar Nemzeti Bank voted to raise the central bank base rate by 50 basis points to 6½% at its meeting on Tuesday. The increase will take effect on Wednesday.
The council said it decided to raise the rate in view of the upside risks to inflation and increased perceptions of the risks associated with the economy. It warned that it may have to raise the rate further if the outlook for inflation and risk perceptions remains persistently unfavorable.
In the council's judgment, economic growth is likely to remain subdued over the next two years and the consumer price index will increasingly reflect the deflationary impact of weak domestic demand. However, the council believes the depreciation of the Hungarian forint in recent months is a threat to meeting the 3% inflation target.
Increases in value-added taxes and excise duties are likely to raise the consumer price index significantly in 2012, the council predicted.
In the council's judgment, the outlook for Hungarian economic growth is unfavorable. The slowdown in global activity, concerns about debt sustainability in some euro zone periphery countries and the vulnerability of the financial system point to a weak outlook in Hungary's export markets.
The council noted that the decision by the government that it would conduct talks with the International Monetary Fund led to only temporary improvement in market sentiment, which deteriorated following Moody's Investors Service's decision to downgrade Hungary's sovereign debt rating.
In this situation, the council believes it is important that an agreement between the government and the international organizations be reached as soon as possible.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.