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Central bank raises base rate 25bp to 8%

The Monetary Council of the National Bank of Hungary (MNB) decided to raise the central bank base rate, which is equal to the bank's two-week deposit rate, to 8.0% from 7.75% effective Wednesday at a rate-setting meeting on Tuesday, the bank said.

The rate rise was widely expected, with most of the analysts expecting a 25bp rise and just a minority forecasting a 50bp hike.
The Monetary Council has been raising the base rate at each of its monthly rate-setting meetings since June. The base rate increased by 50bp on September 25, on August 29 and on July 25, after a 25bp hike effective June 20. Before the June rise, the base rate was unchanged since September 20, 2005, when it was reduced 25bp to 6.%.
The Monetary Council said early July it planned to gradually increase rates to bring inflation in line with its midterm target of 3% by 2008, as well as to prevent a temporary pickup of inflation. (MTI-Eco)