Hungary: Central bank makes emergency rate hike
Hungary's central bank Wednesday made a steep emergency interest rate hike to stabilize the country's currency, hurt by the financial crisis, raising the possibility that other countries in the region could follow its lead. The National Bank of Hungary's Monetary Council raised the base rate to 11.5 percent from 8.5 percent. The base rate is the interest paid by the central bank to commercial banks using its two-week bill facility, the main instrument used by the National Bank of Hungary to manage liquidity on the interbank market. The move is meant to protect the national currency, the forint, which has fallen 16 percent against the euro since the start of October, according to Neil Shearing of Capital Economics.
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