National Bank’s rate hikes deemed necessary

An independent economist welcomes the National Bank’s base interest rate hikes and the announcement of incremental tapering. He believes that returning to more orthodox monetary measures will help Hungary prepare for future financial turmoil.

On Portfolio, Péter Kiss welcomes the National Bank’s return to orthodox monetary policy, i.e. gradual rate hikes and the announcement that it may soon slow down the pace of the large scale purchase of government bonds. Kiss thinks that fast GDP growth (see BudaPost August 19) is making the prolongation of quantitative easing unnecessary. These steps will bolster the credibility of the National Bank, while at the same time preparing the Hungarian economy for the likely negative impacts of the US tapering that will be unavoidable, sooner or later, Kiss believes.

Tags: economy, Forint, GDP, National Bank