The Central Bank of Hungary made an emergency intervention on October 14 to shore up the forint and stem inflation, as growth slows and European Union aid funds remain frozen.
The central bank upped several interest rates in a bid to fend off short-selling in the FX market. The move comes after the central bank said in September it finished its rate hiking cycle – a total increase of 12 percentage points since June 2021, to the highest base policy rate in the EU.
The central bank introduced a new one-day “quick deposit tender” facility with an 18% interest rate, designed to be attractive enough to deter speculate attacks on the currency.
That will effectively replace the base interest rate – which remains at 13% – as the main monetary tool, deputy governor Barnabás Virág said on October 14.
The policy will stay in place until the forint stabilises, Bloomberg…