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Analyst: Fed’s rate hike has little impact on Hungary

Analysis

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The U.S. Federal Reserve’s decision to raise interest rates yesterday will have little impact on Hungary, as this is one of the least vulnerable economies, Mariann Trippon, chief analyst at CIB Bank in Hungary, told the Budapest Business Journal today.

The Federal Reserve Bank in Washington, D.C. (Photo: Wikimedia/Dan Smith)

The Hungarian economy has been characterized by decreasing external debt, disciplined fiscal policy, massive external surplus and slowing but stable growth, Trippon explained.

Direct real economic effects are expected to be marginal, though Hungary cannot isolate itself from global trends, Trippon said. Long-term state bond yields are expected to grow gradually, despite the Self-financing Program in 2016 and the European Central Bank’s Quantitative Easing, and the risk that the forint will weaken is now slightly higher, the analyst added.

Considering the global market, Trippon said the Fed’s decision yesterday was not a surprise, market reactions were moderate, and the base rate is expected to gradually keep growing slowly, which will inevitably have a mild dampening impact on global capital flow and developing markets.

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