Monetary Council wary of inflation volatility


The Monetary Council of the National Bank of Hungary (MNB) agreed that measures of underlying inflation should remain in its focus as volatility in headline CPI persists in the coming period at a monthly policy meeting in March, the central bank announced on its website.

"Decision-makers unanimously argued that extreme volatility in inflation would persist over the coming period; therefore, special attention should be paid to developments in measures of underlying inflation capturing persistent trends, particularly core inflation excluding indirect tax effects," according to the recently published minutes of the meeting.

 Some rate-setters highlighted at the meeting that CPI would "approach 5%" in the second quarter, although half of that increase could be attributed to higher fuel prices and tax changes.

Council members agreed that investors' risk appetite towards emerging markets is a "key risk factor" in terms of the inflation outlook, while potential second-ro und inflationary effects arising during the restart of the economy are "a new risk" requiring "special attention."


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