Hungary: Central Bank halts tightening cycle
February 21, 2011
At its latest monetary policy meeting on 21 February, the Central Bank left the benchmark rate unchanged at 6.00%, in a move widely expected by the market. The decision represented a halt to the monetary tightening cycle that saw three consecutive 25 basis point rate hikes since November, in an attempt to control rising inflation and anchor inflation expectations. The Bank maintained the same tone of the previous meeting, stating that inflation is ?expected to be considerably above the Bank's 3% target in the coming quarters, due to significant cost-push shocks hitting the economy?, which include the windfall tax on the energy, telecommunications and retail sectors imposed by the government this year. The Central Bank projects inflation to end the year at 3.8%, which is above its 3.0% inflation target (+/- 1.0% tolerance margin).