National bank of Hungary hiked its key 2W deposit rate by 50 bps to 9.00% today afternoon. Central bank’s warning against increasing inflation risk from two weeks ago material-ized sooner than the market had predicted. Last week, the CPI broke from its expected disinflation path and confirmed that the buoyant domestic demand and fast rising wages started to push prices up. Due to the increase from 5.9% to 6.1%, the CPI target for the end of 2002 become endangered.
The bank also showed that its relations to the incoming gov-ernment will be quite different from its close relations with the outgoing cabinet.
Jakub Dvorak, CSOB Investment Research