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Central bank raises base rate 50bp to 7.75%

The Monetary Council of the National Bank of Hungary (MNB) decided to raise the central bank base rate to 7.75% from 7.25%, effective Tuesday, at a rate-setting meeting on Monday, the bank said.

The rate rise was widely expected, with some of the analysts expecting a 25bp raise and others a 50bp hike.
The Monetary Council has been raising the base rate at each of its monthly rate-setting meetings since June. 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 resulting from tax hikes in the austerity package raising inflationary expectations.