The inflation environment caused by the war is forcing central banks to raise interest rates. Hungary has the highest base rate in the region (10.75%), following the central bank’s July rate hikes (200 and 100 basis points).

Against expectations of 25 basis points, the ECB started its rate hike cycle in July with 50 basis points.

In an environment of higher interest rates and higher inflation, there is a trend towards a preference for premium Hungarian government bonds with above-inflation yields over those with fixed yields.

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