Monetary world

In the first weeks of 2014 the Fed announced that it would reduce its bond purchases from USD 75 billion to USD 65 billion.

The financial universe is about to undergo changes: the Fed’s next step might be stopping bond purchases and that could be followed by raising interest rates. The Central Bank of Hungary (MNB) lowered the base rate to a record depth of 2.85 percent. Although the EUR/HUF exchange rate skyrocketed to 314, Hungary’s monetary leaders didn’t seem worried and there is great chance for MNB reducing the base rate further! Obviously, the strategy behind this is that low interest rates will make businesses and people invest in the economy instead of keeping their money in banks. What is more, if the forint is weak, it is also easier to subsidise export and increase the level of foreign investment. But let’s not forget that people with foreign currency mortgages still haven’t been saved and this situation will have to be dealt with sooner or later…