MNB raised the base rate and both sides of the interest rate corridor by 30 bps today

HUNGARY - In Brief 27 Jul 2021 by Istvan Racz
The base rate thus went to 1.2%, and the corridor remains +/- 95 bps around this level. This is a bit more than expected (15-30 bps) by the market, and it is in conformity with the MNB's three-month old commitment to a distinct tightening trend and to a front-loaded approach. The key point must be to keep the forint relatively strong - the MNB surely does not have an exchange rate target but a relatively strong forint must definitely mean something south of EURHUF 360 for now.At 3pm, when the communiqué is to be released, the Bank will also speak on its Youtube channel. It will be interesting to see/hear what they are writing/saying on the planned cutback of QE policies if any. We suspect that after a 30 bps rate hike, they will not be particularly ambitious on that latter front.

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