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MNB rate rise is start of tightening cycle, says Simor

A decision by the National Bank of Hungary's Monetary Council on Monday to raise rates for the first time since the autumn of 2008 marks the start of a tightening campaign, MNB governor András Simor said in an interview with Index published on Friday.

Asked whether the decision to raise the central bank's key rate by 25bp to 5.50% means the start of a cycle of rate rises, Simor said, "Yes. With regard to the degree and frequency of further tightening, the Council does not wish to give more concrete information." "The outlook and data arriving hereafter will determine further steps," he added.

In a statement published on Monday, the Council said it decided to raise the base rate because inflation had remained persistently higher than the 3% mid-term target as well as because of upside risks to CPI. "It may be necessary to increase the base rate further in the coming months in order to meet the inflation target," it added. (MTI-ECONEWS)