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National Bank raises its base rate

November 18th, 2021

A financial analyst admits that the issuing bank is taking inflation more seriously than so far but is only cautiously optimistic about the success of the moderate shift in the National Bank’s monetary policy.

Instead of the 0.15% monthly interest hikes enacted by the National Bank over the past months, this time the base rate was increased by 0.3%. The Forint rate hasn’t improved in response. The National Bank then announced that its weekly deposit rate will be higher than the base rate and that a long-term series of anti-inflationary measures will follow.

On Portfolio, István Madár feels that if the National Bank wanted to give the impression of being resolved to fight inflation it should have put in place a higher base rate, rather than just promising to use higher weekly deposit rates. That in fact gives the impression as if the National Bank didn’t want to admit that it is operating a shift in its monetary policy. That is why, Madár explains, the market didn’t react favourably to the base rate hike, although it is higher than the monthly increases so far. As for the promise of a more consistent anti-inflationary policy on the part of the National Bank, Madár hopes it will be successful but doesn’t commit himself without knowing what the new measures will be.

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