Hungarian Rates Set to Rise Further as Junk Rating Risks Forint

Hungarian interest rates may rise further from the European Union’s highest level as policy makers seek to protect the forint from the effects of the country’s debt being downgraded to junk, the central bank said.

The Magyar Nemzeti Bank is ready to increase the two-week deposit rate after boosting it to 6.5 percent from 6 percent yesterday, central bank President Andras Simor told reporters in Budapest yesterday. Forward-rate agreements rose, indicating investor expectations for higher borrowing costs.