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MNB president sees price stability by 2008

Hungary's central bank MNB will carry on decreasing the base rate if inflation continues to lower as it is expected by the bank's experts, MNB president András Simor said.

Decrease of the base rate will remain “conservative and moderate” he added. MNB projects price stability at the end of 2008 or the beginning of 2009. Price stability would mean a 3% inflation throughout a period of 12 months. But even a lower than 3% inflation would not bridle the economy, he added. The central bank and the government do not agree on the issue of the +/-15% trading band of the Hungarian currency, the bank would support scrapping the band because it might become an obstacle to pursuing the inflation target, but the issue is not on the agenda as yet. The issue is not about to turn into a conflict within the next two-years or more, Simor told press agency Reuters. (Gazdasági Rádió, Napi Gazdaság)