BUDAPEST (Reuters – Hungary will set aside retail interest rates on mortgages for six months starting January. The move is the latest to help households avoid rising prices ahead of a tightly contested national election.

Hungary’s central banks, which was the first to raise borrowing costs in response to the outbreak of coronavirus in 2020, have increased their base rate 180 basis points from June, to the highest level since May 2014, and are the most active in Europe.

The inflation rate in Hungary soared to 7.4% in November. This was higher than anticipated due to the rise of fuel, alcohol, tobacco and other prices. The prices of services rose by 4.6%

To curb inflationary fears and slow price rises, the central bank stated that it will continue to raise interest rates throughout next year.

Viktor Orban stated in a Facebook video (NASDAQ:) that inflation was affecting many other areas. Therefore, it is necessary to create new lines of defense. “We are initiating a lockdown on retail interest rates.”

Orban indicated that the retail interest rate for mortgages would remain at their end-October levels. This would mean lower monthly repayments beginning in February.

Shares in Hungary’s OTP Bank fell 2.3% to 16,495 Forints (50.61) at 1412 GMT. This was lower than the Budapest blue-chip index which dropped 0.7%.

The announcement, according to currency dealers also had an effect on the forint. This is only about one percent below the November all-time lows of 372 euro per Euro.

Emails seeking comment were not promptly answered by OTP spokespersons and Hungarian Banking Association spokespersons. The spokesperson for the central bank declined to comment immediately.

Inflation is expected to average around 5% in this and the next year, according to the central bank. This pressured by higher energy prices, global supply chain disruptions and tight labor markets.

Orban, 58, will now face an opposition party that includes the Democratic Coalition, Socialists liberals, and the former far-right Jobbik. This is the first election since Orban won power following a 2010 landslide.

Orban last month announced that fuel prices would be limited to protect consumers against further price increases. He also targeted key voter groups such as families, career starters, and pensioners, who will receive big tax cuts and larger payouts in the run-up to the election.

($1 = 325.95 forints)