The National Bank of Hungary (MNB) is able to meet the 3% inflation target for 2008 at an exchange rate of Ft 255 to the euro, MNB vice president candidate Ferenc Karvalits said at a parliamentary hearing on Monday.
Karvalits said the inflation targeting system is a suitable means with which to achieve price stability, which is the MNB’s main task. „Meeting the inflation target is manageable for the central bank within the framework of the trading band,” Karvalits told reporters after his parliamentary hearing in Budapest today. „There’s no tension in the system.” The system is efficient, sustainable and capable of being developed further, he said. He noted that at present it is the joint responsibility of the government and the central bank to set inflation targets.
Karvalits was speaking to Parliament’s Economics and IT Committee, which unanimously supported his appointment to the post of vice president of the MNB. After fluctuating just above 250, the forint firmed to well below 250 last week on renewed speculation that Hungary would eliminate the forint’s intervention band which allows the forint to fluctuate +/-15% around a midrate of 282.36 to the euro.
Even as the annual inflation rate rose to 8.8% in February, the highest in almost six years, expectations haven’t escalated, which probably will make it easier for the bank to reduce the rate to its 3% medium-term goal, he said. The wage figures in the next few months will help determine the inflation outlook, he added. (Bg, google.com/news)