In Hungary, the central bank is making great efforts to banish the specter of inflation.
On Tuesday, the Monetary Council (Magyar Nemzeti Bank MNB) surprisingly increased the key interest rate by 185 basis points to 7.75 percent.
This is significantly more than observers had expected and is now the highest key interest rate in the Visegrad region (Poland, Czech Republic, Slovakia and Hungary).
Michael Seiser
Business correspondent for Austria and Hungary based in Vienna.
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All other interest rates were also raised in Hungary by 135 basis points.
The market reacted with relief on the currency front.
Less than 400 forints had to be paid for one euro in the afternoon.
The national currency has come under increasing pressure in recent months.
At the beginning of the week, the exchange rate rose to a new all-time low of 404 forints against the euro.
Price increases are likely to be in the double digits this year, despite the price caps imposed by the national conservative government on basic foodstuffs and fuel.
On the other hand, the monetary politicians had now sent a signal.
The HUF could have come under immediate downward pressure if the MNB simply ignored expectations and hiked rates by just 0.5pp.
The fundamental framework conditions are also unfavorable.
Finally, there are strong wage increases to cope with the higher cost of living.
This sets in motion a wage-price spiral.
Since inflation began to accelerate at the beginning of last year, the central and eastern European central banks have implemented what is, in absolute terms, an acceptable level of monetary tightening, according to Commerzbank.
But some real interest rates are now more negative than at the beginning of the tightening cycle, says Tatha Ghose, pointing out the difficulties in finding a normal path again.
The weak forint forces the MNB to accelerate the interest rate carousel.
Despite the price freeze measures, core inflation has already reached the top in Europe because too much inflation is being imported.