The National Bank of Hungary surprised the market and economists again by setting the weekly deposit rate at 2.9%.
The Hungarian central bank (MNB) raised the weekly deposit rate by 0.4 percentage points to 2.9%. This is more than most market participants expected (0.3 percentage point).
Previously, the MNB raised the weekly deposit rate, which is now the main instrument in its arsenal, only a week ago – then also the upward move to be higher than economists’ expectations (0.7 instead of 0.4 percentage point). Earlier, at the “regular” meeting on November 16, the Hungarian monetary authorities also announced a rate hike.
– Short-term risks in the financial and commodity markets have increased recently and the bank must respond to them in a quick and flexible manner. The appropriate instrument is the weekly deposit rate of the central bank. As long as the financial and commodity risks persist, the MNB will be ready to set the weekly deposit rate above the reference rate, according to a press release following the last meeting of the body deciding on Hungarian monetary policy. Weekly rates are to be set through weekly auctions with commercial banks depositing funds with the central bank.
In reaction to today’s unexpected hike, the EUR / HUF rate fell from 368.5 to 366.5 forints and then rose to 367.5 forints. These are still higher levels than a week ago when the euro was HUF 363. From the beginning of the year, the euro has increased by 1.3 percent from the Hungarian perspective. This is less than in the case of the increase in the EUR / PLN exchange rate (2.3% in 2021). One zloty currently costs 78.7 HUF against 79.4 at the end of 2020.