Hungary could achieve price stability in three to five years, provided the government's fiscal austerity program reaches its goals, said György Surányi, head of Central and Eastern Europe Region at Intesa Sanpaolo SpA, who is also tipped as one of the potential candidates to become the next governor of the National Bank of Hungary.
„I hope the macro adjustment is going to happen in the country and in the next three to five years Hungary will also experience sustainable inflation, price stability,” Dow Jones Newswires quoted Surányi as saying at a conference in Vienna on Wednesday. Twelve-month inflation hit 6.5% in December and analysts and the central bank expect the headline inflation to peak around 9% in the Q1 of 2007. In the past, Hungary has managed to curb inflation by accumulated huge distortions, essentially in every field of the macroeconomic arena, Surányi said. „The central bank hasn't yet won the battle over inflation because the temporary deceleration in inflation (in the past) was kept up through repressed inflation, price administration and fast growing fiscal deficits,” Surányi said. Prices were also kept artificially low through the forced, unsustainable appreciation of the Hungarian forint. But deceleration achieved through forced currency appreciation can't anchor medium- and long-term inflationary expectations, Surányi warned. (Mti-Eco)