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Significance
The attempt to bolster the forint with a hefty rate rise shows a severe loss of confidence in Hungary’s economy. The highest inflation rate since 1996, the energy shock from the war in Ukraine and the prolonged standoff with the EU blocking billions in funding have made it difficult for policymakers to restore credibility.
Impacts
Outflows from EM bond funds are likely to continue past USD81bn, already the largest outflows since records began in 2005.
The next Czech National Bank Board meeting will balance resuming interest rate hikes to tame soaring inflation against economic slowdown.
The euro’s weakening against the dollar will contribute to acute inflationary pressures in the euro-area.
Keywords:
Hungary,
EUR,
EU,
economy,
exchange rate,
foreign investment,
monetary,
policy,
prices,
balance of payments,
bonds,
capital flows,
debt,
fiscal,
foreign trade,
Capital markets
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2022
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