The Hungarian National Bank (MNB) surprised many economic analysts today by raising the benchmark base rate by 300 basis points. As such, interest rates in this emerging Eastern European economy will now stand at 11.5 percent.

The MNB’s main goal was to strengthen the Hungarian forint, as well as respond to the global financial crisis and ensure that Hungary is spared from the worst impact of the market turmoil in the West.

At the beginning of this week, central bank officials maintained that they did not plan to hike interest rates. As such, the move earlier this morning served as a surprise to even the most savvy market observers.

Analysts believe that the interest rate hike’s main impact will be on the Hungarian forint, which has fallen in value against both the euro and the US dollar in recent weeks. The move is widely expected to boost the forint, which traded yesterday at around 280 per euro.

Only last month, the rate stood at around 250 forints and it is expected to climb back closer to this point if the MNB’s move, as well as that of the Hungary’s Socialist government, succeed in convincing foreign investors that this Eastern European country remains a stable and safe place to invest.

Analysts from Erste Bank agreed that the MNB’s move served as the clearest indication that Hungary plans to keep inflation at the current target of 3 percent and will not let it rise beyond this point. The expected strengthening of the Hungarian forint will likely help ensure that the target is met.