Hungary’s central bank raised its key interest rate further on Tuesday in a bid to anchor inflation expectations.
The Monetary Policy Council raised the base rate to 2.90 percent from 2.40 percent, the Magyar Nemzeti Bank said.
The overnight deposit and lending rates were also raised by 50 basis points each to 2.90 percent and 4.90 percent, respectively.
“The Monetary Council will continue the cycle of interest rate hikes until the outlook for inflation stabilizes around the central bank target and inflation risks become evenly balanced on the horizon of monetary policy,” the bank said in a statement.
The central bank has raised the key interest rate in every policy session since June last year. The base rate has been hiked by 230 basis points thus far.
“In the Monetary Council’s assessment, the catching up of the base rate to the level of the one-week deposit rate is warranted,” the bank said.
“Accordingly, the Council will continue the cycle of base rate hikes at a monthly frequency and in larger increments than in December.”
The bank also said it will further tighten monetary conditions by raising the one-week deposit rate.
Gross domestic product is expected to grow 4.0-5.0 percent this year, after likely exceeding 6.3-6.5 percent last year, the bank said.
While headline inflation likely peaked in December, the risk remain to the upside, in particular due to external factors, the bank noted.
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