National Bank raises base rate

Commenting on the rate hike announced by the National Bank on Tuesday, a left-wing columnist interprets National Bank President Matolcsy’s criticism of overspending as a declaration of war on the government.

On Tuesday, the National Bank raised the base rate to 0.9 per cent (from 0.6 per cent) in its first rate hike in a decade. In an opinion piece in Magyar Nemzet on the previous day, National Bank President György Matolcsy criticized the government for overspending. In his announcement on Tuesday, Mr Matolcsy said that the National Bank would start a series of rate hikes to keep inflation at bay. He also announced that the National Bank projects a higher growth rate (6.2 per cent in 2021) and higher inflation (4.1 percent) than previously  estimated .

In Népszava, Zsolt Papp describes Matolcsy’s words as a declaration of war on the government. The left-wing commentator thinks that the government wants to win the 2022 election with vast overspending and tax cuts (see BudaPost January 22,  June 11, and June 12) while Matolcsy fears runaway inflation. Papp believes that the National Bank’s stance indicates a new cleavage within the government side.

Tags: budget, deficit, Forint, inflation, interest rate, Matolcsy, National Bank