Analysts have raised questions about the wisdom of
The MNB should continue to raise interest rates until inflation appears to have peaked, which could happen at the end of 2022 at the earliest,
Inflation is expected to rise further in the autumn months to 20%, mainly due to factors outside the scope of monetary policy, such as the scaling back of energy subsidies and higher food prices caused by the drought, according to policymakers, who raised inflation forecasts for 2022 and 2023 sharply from the last forecast three months ago.
The MNB expects annual average inflation to rise to13.5-14.5% in 2022 and slow to 11.5-14% in 2023 compared to the 6.8-9.2% and 11.5-14% forecast made three months ago.
The success of MNB’s measures to absorb excess liquidity in the banking system will also be key, according to Makronom. The central bank will raise the mandatory reserve ratio of banks from
The MNB is returning to its previous "unorthodox" monetary policy toolkit, primarily trying to influence short-term interest rates by managing interbank liquidity, but it is questionable how that will be assessed by foreign investors,
The central bank has successfully conducted this liquidity policy in the past in a low-interest rate environment, but it is questionable how successful this will be when inflation is high and at a time when central banks around developed economies are getting rid of unconventional instruments and upping rates to fight inflation, he added.
Magyar Bankholding analyst
Capital Economics said interest rates could rise further as strong wage growth, the widening current account deficit and risks in the global economy put further pressure on the forint.
The forint initially strengthened against the euro after the 125bp rate hike, but gave back its gains after comments by MNB governor
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