Inflation to approach 3% target only by mid-2018, says MNB

MNB

Inflation remains persistently low, and will get close to 3%, which represents price stability, by the middle of 2018 only, the National Bank of Hungary (MNB) said in its fresh Inflation Report published today (Thursday), according to Hungarian news agency MTI.

At the same time, the dynamic expansion of the domestic economy will continue in the second half of 2016, after a temporary slowdown earlier this year, it added in the report. 

The MNB noted that growth would increasingly rely on strengthening consumption, which will offset the Q2 decline in investments. With costs gradually increasing and demand strengthening, inflation will steadily rise into positive territory and get close to the medium-term target by mid-2018, the MNB said.

The budget deficit may be much lower than the target this year, at 1.4%-1.5% of GDP. For 2017, the budget deficit is projected at 2.1-2.3% of GDP.

The MNB released the main figures of the Inflation Report on Tuesday after the monetary councilʼs rate decision. The bank lowered its inflation forecast to 0.4% from the earlier 0.5% in 2016 and to 2.3% from 2.6% in 2017. The MNB kept its GDP projections unchanged at 2.8% in 2016 and 3% in 2017.

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