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Cbank: Wage adjustment, limited domestic demand could help meet inflation goal

Hungary’s inflation rate could fall to around 3%, in line with the central bank’s target, as wage adjustment and constrained domestic demand could help the process, National Bank of Hungary deputy governor Ferenc Karvalits said at a conference on Wednesday.

The bank’s latest Inflation Report published in February forecast inflation to drop to 3% in the last quarter of 2009. The National Bank of Hungary’s (MNB) strict monetary policy will ensure with a tight monetary policy the conditions for meeting the target and will strengthen the role of the inflation target in anchoring inflationary expectations, Karvalits said. He noted that international interest rates and global risk appetite amount to a big challenge for monetary policy in the current circumstances. He said the US subprime mortgage crisis has caused no direct losses for the Hungarian banking system, but could cause indirect stability risks because of the rising cost of financing and the slowdown in global economic growth. (MTI-Econews)