IMF representative: Still room for easing in Hungary

Conferences

There is room for a possible continuation of the National Bank of Hungaryʼs easing cycle in light of the very low inflationary pressure in the country, deputy director for the IMFʼs European department Jorg Decressin (pictured) said at a press conference at the National Bank of Hungary (MNB) today.

Decressin said the MNBʼs efforts against a decline in consumer prices was appropriate, noting that once a period of deflation has begun, it is very difficult to terminate.

The IMF projected Hungaryʼs economy would grow 2.7% this year in a regional report released on Monday; this is well under last yearʼs growth rate of 3.6%.

Decressin said it was only natural for economic growth to slow after the recovery from the crisis. In addition to cyclical changes, growth will also slow given the decline in European Union funding, he added.

He noted that Hungaryʼs case differed from other countries in the region because its state debt ratio was higher at the start of the crisis, leaving it with little room to maneuver in terms of fiscal policy. The country is now looking at strong growth for this year, similar to neighboring countries.

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