October 18, 2022
After Prime Minister Viktor Orban pushed the finance minister and the central bank governor to reduce inflation, which reached a 26-year high in September, Hungary’s central bank took unusual steps to defend the forint as it was losing value.
The National Bank of Hungary’s Monetary Council made the decision to increase the upper limit of the interest rate corridor while keeping the base rate same at 13.0 percent.
The one-week collateralized loan was terminated immediately after the monetary council increased the overnight collateralized lending rate by 950 basis points to 25.0 percent.
A one-day foreign exchange swap instrument and daily overnight (O/N) deposit fast tenders with greater interest rates than before were also announced by the bank.
The bank also promised to fulfill the upcoming months’ foreign currency liquidity requirements for energy purchases.
The central bank stated that in addition to its core goal of price stability, it is prepared to act using any tool available in its toolbox of monetary policy to ensure market stability.
Following the decision by the central bank, the forint increased by more than 2% against the euro.
Source: RTTNews
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