Hungarian Central Bank makes predicted interest rate move

As predicted, the Hungarian benchmark interest rate has been raised by the central bank to a three year high, as rising prices have caused the need to increase the rate to 8.25%.

András Simor, governor of the Hungarian Central Bank said that the move was necessary and that its main focus was to fight against inflationary pressures.

The policy makers who believed that holding the rate was the best move were overshadowed by the safe majority that headed for the increase.

This follows the step of most of the emerging markets whose central banks that include Brazil and South Africa have raised interest rates as a result of global inflation.

In Hungary the consumer prices as well as energy prices have doubled the central banks target, and that this may cause a future increase.

Prices have also rocketed for durable goods such as cars and refrigerators, although the price drive was fuelled by the price of petrol.

Historically prices have been stable although currently consumer prices in March were 6.7 percent higher than a year earlier.

The main risks to inflation in remaining under the ceiling rate of 3 percent is likely to be affected by the slowing wage growth.

The average monthly gross wage last month rose by 13.4 percent which is close to double forecast.

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