Hungary raises central bank base rate by 25 bps to 5¾%

By Richard Connell

New York, Dec. 20 - The Monetary Council of the Magyar Nemzeti Bank raised its central bank base rate by 25 basis points to 5¾% at its meeting on Monday, according to a news release issued by the bank.

The council of the Hungarian central bank forecast that the domestic economy was likely to continue its recovery from recession over the next two years, noting however that output will remain below its potential.

While strong external demand is expected to be the main driver of the recovery, the council also stated that it expects both household consumption and investment by companies to increase.

Inflation in Hungary has risen due to higher costs of unprocessed foods, and the council expects it to exceed considerably the 3% target level in coming quarters due to significant cost-push shocks hitting the economy.

While the council raised the rate in light of inflation remaining well above the target level as well as the upside risks to inflation, it also hinted that future interest rate hikes may be forthcoming.

© 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.