MNB lowers inflation forecast to 2.4% for 2017

MNB

The National Bank of Hungary (MNB) lowered its inflation forecast for 2017 to 2.4% in its quarterly Inflation Report released on Tuesday, down from 2.6% in the previous report published in March, Hungarian news agency MTI reported.

The MNB also lowered its 3% inflation forecast for 2018 to 2.8%, but kept its 3% forecast for 2019 unchanged.

The MNB is predicting 3.6% GDP growth this year, unchanged compared to its earlier forecast. The 3.7% economic growth expected for next year is also in line with earlier projections, as is the 3.2% GDP growth forecast for 2019.

The central bank will publish the full Inflation Report tomorrow.

MNB noted that for 2016 it is expecting the Central Statistical Office (KSH) to revise its GDP growth figure of 2% upwards to 2.2%. The MNB issued a similar notice in the March Inflation Report.

A fan chart published yesterday indicates that the MNB expects inflation to reach the 3% target in early 2019. In March, the fan chart showed inflation reaching the threshold early in 2018.

The MNB puts the inflation target in a +/-1% tolerance band.

The Hungarian government forecasts GDP growth to accelerate to 4.1% this year and to 4.3% next year, while it expects inflation to be 1.6% in 2017 and 3% in 2018 based on its projection in an update of the countryʼs Convergence Program.

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