Hungary

Hungary’s stocks and currency fell after Prime Minister Viktor Orban’s government again resorted to its tactic of imposing special taxes on banks and other industries to plug gaps in its budget, Bloomberg News reported. It plans to keep current levels of windfall taxes on banks, energy and foreign-owned companies, despite earlier promises to lower them, Cabinet Minister Gergely Gulyas said on Monday. He said the measures would net the budget an additional 400 billion forint ($1.1 billion).

Hungary further slowed the pace of cuts to the European Union’s highest key interest rate, with policymakers seeking to anchor the volatile forint in a riskier economic environment, Bloomberg News reported. The National Bank of Hungary reduced the benchmark interest rate by 50 basis points to 7.75% on Tuesday, matching most forecasts in a Bloomberg survey. The unanimous decision compared with a 75 basis-point reduction in March and a full percentage point cut in February.

Hungary's Central Bank said on Thursday repeated "attacks" by Prime Minister Viktor Orban's government on its monetary policy could backfire and limit the scope for easing, Reuters reported. Orban and his former ally, central bank Governor Gyorgy Matolcsy, have been involved in an increasingly bitter policy spat since a 2022 election, with the sides trading blame over a surge in inflation to the highest levels in the European Union.

Hungary has not made sufficient progress on the European Union's concerns about its respect for the rule of law for the EU to release frozen funds, the EU's budget Commissioner Johannes Hahn said on Thursday, Reuters reported. The EU has frozen billions of euros that Hungary could receive from the EU's budget over concerns about corruption and the country's lack of respect for the independence of the judiciary and non-governmental organisations.

The European Union is considering unlocking billions of euros for Hungary that were frozen over rule-of-law concerns as it seeks to win Budapest's approval for aid to Ukraine including a start to membership talks for Kyiv, senior officials said, Reuters reported. Hungary cultivates closer ties with Russia than other EU states, and is seen as the key potential opponent to a decision due in December on whether to open accession talks with Kyiv, which would require unanimous backing of the union's 27 members.

Hungary's central bank could not cope with curbing inflation so the government stepped in and helped rein in price growth with its own tools, Prime Minister Viktor Orban's chief of staff said on Thursday, turning up the heat on the bank, Reuters reported. Hungary's inflation, which peaked above an annual 25% in the first quarter, is still the European Union's highest at 16.4% in August but is expected to retreat to around 7% by December. High inflation has come at a big cost, as the economy could end up in recession for the whole of 2023.

Hungary’s central bank cut its key interest rate by a full percentage point for a fifth month, ending an emergency monetary regime imposed last year to arrest a slump in the forint, Bloomberg News reported. The Monetary Council lowered the overnight deposit rate to 13% on Tuesday, matching the forecast of all economists in a Bloomberg survey. That’s on par with the level of the base rate, which is expected to resume being the effective key interest rate for the economy.

Hungary’s finance minister may propose raising taxes on banks after a year-long recession and the fastest inflation in the European Union blew the country’s budget off course. Shares in OTP Bank Nyrt., the country’s largest lender, plunged, Bloomberg News reported. Record bank earnings expected this year may prompt the government to expand a windfall tax on lenders, Finance Minister Mihaly Varga told economists on Thursday.

Hungary is likely to lower its key interest rate for the second straight month after central bankers signaled a retreat from a tightening cycle that brought borrowing costs to a European Union high, Bloomberg News reported. The central bank in Budapest will reduce the overnight deposit rate by a full percentage point to 16% on Tuesday, according to all eight economists surveyed in a Bloomberg poll. The decision, along with fresh inflation projections, will be communicated in a statement and a press conference at 3 p.m. local time.

Food prices have risen dramatically across Europe in recent months, jumping 19.6% in March from a year earlier and becoming the main driver of inflation as energy costs have fallen. But in Hungary, food prices have surged more than 45% over the year, according to EU statistics office Eurostat, far surpassing the next highest figure of just over 29% in Slovakia, the Associated Press reported.