Politics mars eastern European FX process

The Hungarian central bank raised interest rates earlier this month by a full percentage point in a bid to push the forint currency towards 250 per euro, a beneficial level for achievement of the bank’s inflation target. However, after raising rates, officials said they expected rates to fall again. This approach to monetary policy is unlikely to have a positive outcome, analysts said.

"The Hungarian forint is likely to rise in volatility against the direction of what the authorities want,"

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