Hungary’s cost of protecting against default soared the most in three years, bond yields jumped and the forint plunged as the U.S. Federal Reserve said it may phase out stimulus that has stoked a global debt rally.
Hungary’s decision to extend special industry taxes beyond their planned expiration may undermine efforts to boost economic growth to more than 5 percent by 2014 and meet revenue targets as debt repayments peak, analysts said.
Hungary sent its reply to the European Commission on the European Union executive’s infringement procedures in three areas, including monetary- policy independence, in an effort to revive talks on a bailout.
Hungary’s Prime Minister-designate Viktor Orban sparked investor concerns about the independence of the central bank by signaling he may oust bank President Andras Simor , who has defied the new ruling party’s calls to resign.
Hungary said it started talks with the International Monetary Fund on a backstop that doesn’t include a loan. The Washington-based lender said it hasn’t received a request for negotiations on a Fund-supported program.