Hungary’s central bank may end its rate-raising cycle after September, Deputy Governor Feraj

Hungary’s central bank may end its rate-raising cycle after September, Deputy Governor Feraj

Szeged, Hungary (Reuters) – Hungary’s central bank may consider ending its more than year-long rate-raising cycle after next Tuesday’s meeting when rates rise again, Hungarian Deputy Governor Barnabas Viraj told reporters on Thursday.

Central European rate-setters were the fastest last year to start raising rates and accelerating this year with inflation rising, but some are starting to slow, or perhaps end, the tightening cycles.

The Hungarian National Bank (NBH) raised its base rate by 100 basis points to 11.75% last month, but Viraj has since raised the possibility of halting the bank’s rate hike cycle, which has exceeded 1,100 basis points since June 2021.

“We need to assess the end of (the cycle) every month,” Viraj told reporters on the sidelines of an economic conference. “We should put this on the table already in September and decide how to close this depending on the options available.”

He said the main factors determining the end of the cycle will be positive forward-looking real interest rates, shifting inflation risks into balance, the outcome of financing talks with the EU, and promoting monetary transition through tighter liquidity conditions.

Farage said the bank could raise rates by 50, 75 or 100 basis points next Tuesday, after which “all options are on the table,” including ending the rate hike in one go or ending the cycle in several smaller steps.

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