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Hungarian central bank holds rates at 7.5%

Hungary’s central bank kept its benchmark interest rate at 7.5% policy makers decided on Monday.

Austerity measures introduced by the government last year forced inflation to a high of 9% earlier this year. Hungary’s central bank (MNB) unexpectedly kept its benchmark interest rate at the highest in the European Union because rising food prices threaten to derail its efforts to subdue inflation. Policy makers, led by MNB’s President András Simor, refrained from lowering the two-week deposit rate, now at 7.5%, for a third time this year. Policy makers had a “long debate” and the vote was “quite tight,” Simor said. Inflation is now on a downward path, dropping to 6.3% in September, but it has not fallen as fast as had been expected. (Gazdasági Rádió)