Hungarian central bank stands pat, expects economy to grow 3.6 pct in 2017

The Hungarian central bank kept its interest rates on hold at record low levels today. The base rate and overnight lending rates remained unchanged.  According to the MPC’s assessment, the Hungarian economic growth is picking up over the forecast horizon. Some degree of unused capacity has stayed in the economy; however, it is likely to be gradually absorbed as output grows dynamically, said the MPC in a statement.

The MPC expects consumer price index to drop again from its current level to the bottom of the tolerance bank by the end of this year. Meanwhile, core inflation is likely to drop in the second half of 2018 as the temporary effects related to changes in tobacco and dairy product prices wane. The central bank’s measures of underlying inflation are likely to be around 2 percent.

“The general increase in domestic demand will continue to play a central role in economic growth. Hungary’s current account surplus is expected to fall over the forecast horizon in response to rising domestic demand. Economic growth this year will also be supported by the fiscal budget and the stimulating effects on investment of EU funding”, stated the MPC.

According to the MPC, Hungarian annual economic growth for this year is expected to come in at 3.6 percent, while the economy is likely to have a stable growth between 3 and 4 percent in the years ahead.

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