CPI to stabilize from mid-2022 on 'proactive' monetary policy


Photo by noppawan09/Shutterstock.com

The National Bank of Hungary (MNB) said inflation will stabilize around the 3% central bank target from mid-2022 as the result of "proactive" monetary policy in its latest quarterly Inflation Report released on Thursday.

MNB said CPI - which spiked at an annualized 5.1% in April and May, the highest level in years - was "in line with our earlier expectations in recent months"; however, it acknowledged that inflation is "declining more slowly than previously expected".

The central bank said medium-term inflation prospects have risen as buoyant demand increases companies' room for maneuver to pass on increases in wage, transport, and raw material costs to consumers.

It projected CPI will fall to "around 4%" from July and remain in the upper range of the NBH's 2%-4% tolerance band for the rest of the year, before stabilizing around the 3% target from the middle of 2022 "due to proactive monetary policy measures".

MNB puts core inflation excluding indirect taxes - a bellwether indicator of underlying inflation - at 3.1% in both 2021 and 2022, and at 3% in 2023.

"The upside risks to the inflation outlook have generally strengthened, and it is of paramount importance to monitor and avoid second-round effects," MNB said in the report.

The bank's Monetary Council started a tightening cycle at a monthly policy meeting on Tuesday, raising the central bank's base rate by 3 0bp to 0.90%. Policymakers said they would assess the need to further tighten monetary conditions "in a data-driven manner" on a monthly basis "until the outlook for inflation stabilizes around the central bank target and inflation risks become evenly balanced on the horizon of monetary policy".


Companies Borrow HUF 256 bln in October Banking

Companies Borrow HUF 256 bln in October

MPs Approve Tax Changes Parliament

MPs Approve Tax Changes

Mahart Container Center Depot Opening at Budapest Airport Transport

Mahart Container Center Depot Opening at Budapest Airport

Countries Exchange Experiences for Better Production of Catt... Conferences

Countries Exchange Experiences for Better Production of Catt...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.