Hungary in rate hike surprise

BUDAPEST - Hungary was the first of the EU’s emerging eastern economies to raise interest rates on Monday, and it warned it may have to repeat the surprise move again to combat risks to inflation.

By (Reuters)

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Published: Tue 30 Nov 2010, 11:07 PM

Last updated: Mon 6 Apr 2015, 11:35 AM

The bank raised its base rate 5.5 per cent after six months of no change with policymakers having warned government tax measures — including income tax cuts in 2011 and new taxes on some business sectors — would put pressure on inflation.

“The Monetary Council decided to raise interest rates with regard to inflation consistently above the three per cent goal and the upside inflation risks,” the bank’s post-meeting statement said. “In order to meet the inflation goal more rate hikes may be necessary in the next months.”

Many said they saw Monday’s move as a bid to raise the premium on forint assets and arrest a slide in the currency that has taken it 3.6 per cent weaker against the euro this month.

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