Riots Raise Rates in Hungary

Riots broke out in Hungary after an audio clip surfaced of Prime Minister Ferenc Gyurcsany saying how the government lied about the state of the economy to help him be re-elected. Hungarians trying to be part of the European Union and adapt the Euro needs to have below a 3% of GDP deficit to qualify, where it is currently forecasted to be 10.1% this year. To do this there are increases and social security payments and the sales tax increased from 15% to 20%. Worried that this may cause unwanted inflation and weaken the Forint, the Hungarian central bank (NBH) raised interest rates by 50 basis points to 7.75%. Calyon expects another 50 basis point hike in October.

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