Monetary Council evaluating effects of rate hike cycles

Image by Jessica Fejos

The National Bank of Hungary's Monetary Council is to carry out a comprehensive evaluation of the effects of the cycle of rate hikes based on the projection in the September Inflation Report, adding that the July step size would be a guide regarding the August decision, according to the minutes from the July policy meeting released on the central bank's website.

In their assessment of inflation, Council members agreed that "the rise in inflation was a global phenomenon, which was related to the timing and speed of the reopening of economies. Hungary's economy had been reopened earlier than the European average; therefore, inflationary effects had also appeared earlier".

Decision-makers pointed out that "effects arising from the reopening had been strong in June. This could also be seen in the acceleration of price increases for market services and industrial goods. In addition to higher fuel prices, a two-step increase in excise duty on tobacco products in 2021 had been a significant factor contributing to a pick-up in the domestic price index".

Several Council members highlighted that "the June inflation data had exceeded the central bank projection and market expectations as well".

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