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Hungary central bank at start of “modest tightening cycle”

The National Bank of Hungary has started “a modest tightening cycle”, central bank governor András Simor said in an interview published by the Wall Street Journal Europe on Tuesday.

“One should not believe that a 25bp increase will get inflation back to target,” Simor said. “That doesn't necessarily mean that we need many steps,” he added.

The MNB raised the bank's key rate by 25bp to 5.25% at the end of November. The rate rise was the first since the autumn of 2008. In the condensed minutes of the meeting, rate-setters justified their decision citing rising food prices and high inflationary expectations.

The National Economy Ministry said the decision to raise rates was unjustified in light of economic trends and the general government balance. (MTI-Econews)