The larger-than-expected 30bp interest rate hike by Hungary’s central bank (MNB) today was accompanied by hawkish comments that send a strong message about its intention to bring inflation back to its target. The tightening cycle is likely to be sharper than we had expected, with the base rate rising from 1.20% now to 2.20% in this cycle (versus our previous forecast of 1.70% by early 2022).
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