Hungary to Raise Rates as Tightening Cycle Hits Its Stride

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Hungary will probably raise interest rates for the third time in as many months as policy makers continue their campaign to stem one of the European Union’s highest inflation rates.

The central bank is poised to increase the benchmark rate by 30 basis points to 1.5%, matching the pace of hikes in June and July, according to all but one of 13 economists in a Bloomberg survey. The decision will be announced at 2 p.m. in Budapest, followed by a statement and a briefing an hour later.

Policy makers have stressed that they will keep up the tightening cycle until inflation is on track to hit the central bank’s 3% target over the monetary horizon. 

While the pace of price-growth slowed in July from a nine-year high, record second-quarter economic growth data showed that the speed of economic recovery from the pandemic may require further monetary tightening. The central bank backs a “decisive” policy approach to tackle price-growth, Deputy Governor Barnabas Virag said on Aug. 2.

The forint appreciated 3.2% against the euro over the last month for the biggest gain among 31 major currencies tracked by Bloomberg.

©2021 Bloomberg L.P.