Cbank: Exchange rates most significant factor affecting disinflation trend

Analysis

Hungary’s disinflation trend depends on exchange rates, interest rates and inflation expectations, though exchange rates are now the most significant factor, National Bank of Hungary governor András Simor said at a conference in Budapest on Thursday.

Hungary’s forint has firmed sharply recently, nearing 240 to the euro. Simor said Hungary is not alone in this aspect, noting that the Czech Republic is counting on the strength of its currency to help bring CPI from 6-7% down to the 3% target by 2009, even though the country’s base rate is 3.75%, even lower than the ECB rate. (MTI-Econews)

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