Hungary central bank to continue hiking cycle next Tuesday

Hungary central bank to continue hiking cycle next Tuesday

BUDAPEST - The National Bank of Hungary is likely to extend its cycle of rate hikes with a 20-basis-point increase in its base rate to 1.1% next Tuesday after higher-than-expected inflation data, a Reuters poll of analysts showed. The NBH raised its base rate by 30 basis points to 0.9% last month, becoming the first in the European Union to launch a cycle of rate rises to combat growing price pressures amid a faster than expected recovery from the COVID-19 pandemic. The consensus forecast of 18 economists in a July 19-21 Reuters poll sees the NBH following up last month's rate rise with a 20-basis-point increase NBHI , with tightening bets ranging from 15 basis points to 30 basis points. Headline inflation accelerated to an annual 5.3% in June from 5.1% in May, its highest in nearly a decade, while the NBH's preferred price gauge, tax-adjusted core inflation, also increased to 3.8% year-on-year. "The large upside inflation surprise in June is also creating risks for the NBH to decide to front-load the hiking cycle, but we think that the central bank would prefer to maintain a steady pace of tightening on the back of the upcoming significant inflation deceleration in