The Monetary Council of the National Bank of Hungary (MNB) raised the rate by 100bp to 10.75% on July 26, above the 50bp consensus. This follows a 200bp hike two weeks ago at the non-rate setting meeting. The base rate is now at its highest level since December 2008.
Among its CEE peers, Hungary has the highest base rate and the lowest negative interest rates. The hawkish guidance could help keep the EUR/HUF exchange rate below 400, after it slid to record lows against the Swiss franc, the dollar and the euro earlier this month.