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MNB: Annual inflation rises in 2015

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The annual rate of inflation increased, while core inflation was unchanged in December 2015, the National Bank of Hungary said yesterday in a statement published after rate-setters decided to keep the central bank’s base rate on hold, Hungarian news agency MTI reported.

According to the central bank, measures of underlying inflation continue to indicate moderate inflationary pressures and with a marked fall in oil prices, inflation may be lower in the short term than previously expected, MTI reported. Inflation is expected to remain below the 3% target over the forecast period, and is only likely to approach the target by the end of the forecast horizon, the central bank added, according to MTI.

If the assumptions underlying the MNB’s projections hold, the current level of the base rate and maintaining loose monetary conditions for an extended period, over the entire forecast horizon, are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy, MTI said.

The bank’s Monetary Policy Council expects its Growth Supporting Program and the governmentʼs recent steps to encourage home building to dampen the slowdown in the rate of growth and rising household consumption is also likely to support the economic expansion in the coming years, according to MTI.

The central bank said it expects a recovery as of the second half of the year, chiefly reflecting the strengthening performance of Hungaryʼs export markets as well as the MNB’s and the governmentʼs policy measures.

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