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Higher upside risks could boost inflation outlook - MNB

MNB

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Members of the Monetary Council of the National Bank of Hungary (MNB) agreed that higher upside risks to inflation could drive up the inflation outlook at a policy meeting in May, the minutes from the meeting released on Wednesday show.

"Members emphasized that upside risks to inflation had generally increased driven by both external and internal factors," according to the minutes.

Members flagged sharp increases in global commodity prices and international freight costs, potential demand-supply frictions due to the rapid restart of the domestic economy, and tightening labor market capacities in some sectors parallel with dynamic wage growth.

"Council members concluded that the increase in risks might result in an increase in the outlook for inflation over the 5-8 quarter horizon of monetary policy," the minutes show.

The Council agreed that the gradual lifting of pandemic restrictions "significantly fostered the fast recovery of domestic economic activity" and some members augured "double-digit" economic growth in the second quarter, supported by the low base.

"Council members concluded that the economic outlook for 2021 had improved further," the minutes show.

According to the minutes, the decision-makers voted unanimously at the meeting on May 25 to keep the central bank base rate unchanged at 0.60%.

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