Startup Observer.com
  • Home
  • Industries
  • Innovation
  • outsourcing
  • Business
  • Finance
  • Headlines
  • Opinion
  • News
Home Headlines Hungary ramps up rate hikes as war stokes inflation risks
Headlines

Hungary ramps up rate hikes as war stokes inflation risks

by jcp March 22, 2022
March 22, 2022
gawdo

By Gergely Szakacs and Krisztina Than

BUDAPEST (Reuters) – The National Bank of Hungary raised its base rate by 100 basis points to 4.4% on Tuesday, the biggest hike in the rate since 2008, saying rising energy costs and the war in Ukraine had fuelled inflation risks.

The bank, which raised its inflation forecasts for both 2022 and 2023, said average inflation could rise to 7.5%-9.8% this year and inflation would come back to the bank’s 3% target only in the first half of 2024.

Economic growth will likely be slower than expected this year with the war hitting growth directly through disruption to international supply chains and trade channels and through rising commodity prices, it added.

“The Russia-Ukraine war has posed a much higher risk than usual to the outlook for inflation. The increase in inflation risks warrants a further tightening of monetary conditions,” the Monetary Council said in a statement.

The rate increase was bigger than analysts’ median forecast for a 75 bps hike in both its base rate and the overnight deposit rate in a Reuters poll last week. The bank hiked all interest rates by 100 basis points.

The bank said strong domestic demand may partly offset the adverse effects of the Russia-Ukraine war on growth but exports are expected to make a smaller-than-expected contribution to GDP in 2022 because of supply chain disruptions.

“Depending on the duration of the war and the policy of sanctions, GDP is likely to expand at a slower rate than expected, by 2.5%-4.5% percent in 2022,” the bank said.

Hungarian headline inflation continued its surge in February, hitting 8.3%, despite government-imposed price caps on some basic foods, fuel and energy.

Strong price pressures across Central Europe have been exacerbated by the war in Ukraine, which sent the region’s currencies — including the forint — to record lows versus the euro earlier this month.

The forint firmed to 371.27 from 371.65 on the rate announcement. It has recovered from record lows of 400 this month, helped by the NBH’s pledge that it would use all tools at its disposal to shore up the markets.

Analysts said the inflation risks clearly warranted further rate hikes.

“We think that the recent deterioration in the inflation outlook argues in favour of further large hikes,” Liam Peach at Capital Economics said in a note.

“We expect the base rate to rise above 6% and short-term interest rates towards 8% in the coming months, but there’s a risk of rates rising more quickly if the forint suffers fresh large falls.”

 

(Reporting by Gergely Szakacs and Krisztina Than; Editing by Raissa Kasolowsky and Alison Williams)

www.gawdo.com
Share on FacebookShare on TwitterShare on Linkedin
0 FacebookTwitterPinterestEmail
previous post
EU split on Russia oil sanctions
next post
Nvidia unveils latest chips, technology to speed up AI computing

You may also like

Finland, Sweden to send teams to Turkey to...

May 24, 2022

Germany’s vaccine panel says one COVID shot enough...

May 24, 2022

EU calls for Russia dialogue to unlock Ukraine...

May 24, 2022
Editorial & Advertiser disclosureEditorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
gawdo.com
https://www.gawdo.com
  • About us
  • Advertising & Terms of Use
  • Contact Us
  • Privacy Policy

@2021 - All Right Reserved.


Back To Top
Startup Observer.com
  • Home
  • Industries
  • Innovation
  • outsourcing
  • Business
  • Finance
  • Headlines
  • Opinion
  • News
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT