Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Hungary rate hikes "half-hearted", says Orban aide as cbank meets

Hungary rate hikes "half-hearted", says Orban aide as cbank meets

Hungary’s central bank faced pressure from the government to hike interest rates more quickly on Tuesday, as it meets to decide its policy response to inflation that has hit a nine-year high.

Marton Nagy, chief economic aide to Prime Minister Viktor Orban, said the tightenening cycle the central bank had launched was “half-hearted” compared with the massive fiscal impulse from Orban’s government, resulting in a policy divergence.

The bank was withdrawing from its accommodative stance rather than “genuinely tightening,” in view of surging inflation that Nagy said could remain between 4% and 5% over the next 18 months.

“I would assert that there is indeed fiscal dominance as monetary policy is not sufficiently active, just half-active. Tightening is half-hearted,” Nagy, a former central bank Deputy Governor, told a business conference.

The central bank is expected raise interest rates by 15 basis points to 1.8% on Tuesday.

However, some analysts say there was an outside chance of a larger increase, given September’s inflation print of 5.5% and after a larger-than-forecast hike in the Czech Republic and a Polish hike that no analysts predicted.

On Tuesday, Hungary’s forint firmed as some market players started to price in that possibility, traders said.

Trading on the weak side of the key 360 mark, the forint has surrendered nearly all of its gains since the bank started raising rates in June after it slowed the pace of tightening despite lifting its inflation forecasts last month.

Finance Minister Mihaly Varga earlier told the same conference that the rate tightening that started in June was “justified”, adding it was still to be seen whether the current rise in inflation was a transitory or a lasting phenomenon.

PRE-ELECTION HANDOUTS


Orban, who is facing the prospect of a close election next year after three successive landslides since 2010, has offered voters handouts in defiance of central bank calls for fiscal restraint, upending years of policy alignment.

Nagy said Hungary’s fiscal stimulus would be worth about 15% of gross domestic product over the fourth quarter of this year and the first quarter of 2022, and that the government had fiscal buffers worth 4.5 trillion forints ($14.56 billion) on its Treasury accounts.

He said the budget deficit would be kept at the planned 7.5% of GDP level this year and 5.9% of GDP next year, when economic growth could reach 6%.

($1 = 309.09 forints)

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
×