Actual: 6.50 %
Consensus: 6.50 %
Previous: 6.00 %
The MNB lifted interest rates by 50 bps. The hike was expected because of the recent pressure of elevated risk aversion on the forint. This was confirmed: the bank has identified the currency as a threat to meeting its inflation target. Moreover, it increases vulnerability of domestic financial system, the MNB said.
As risk aversion on global markets remains high, the November hike may not be enough. According to the central bank governor, financial market volatility will persist in the long term. The MNB warned, that more hikes may be needed if conditions remain unfavorable.
However, tighter monetary policy is negative for economic growth that has already worsened. It would be helpful for the country if it could improve its credibility and avoid more tightening. The central sees chance in the IMF deal and says that Hungary must aim for as favorable deal as possible. At the same time, it is important to meet the fiscal plan.