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Mar 27, 2019

Hungarian Central Bank increases both economic growth and inflation forecast

The Central Bank has increased its 2019 inflation forecast from 2.9 to 3.1 percent and its GDP growth forecast from 3.5 to 3.8 percent

The Hungarian Central Bank has increased both its economic growth and inflation forecast for this year, Governor György Matolcsy announced at a press conference on Tuesday.

The Central Bank has increased its 2019 inflation forecast from 2.9 to 3.1 percent and its GDP growth forecast from 3.5 to 3.8 percent. In 2018, Hungarian inflation was 2.6 percent and economic growth reached a 14-year record of 4.9 percent.

According to Rmx.news, Matolcsy said the Central Bank has reached its medium-term goal of sustainable inflation and current trends indicate that international deflation trends will somewhat offset Hungarian inflationary pressure resulting from growing domestic consumption fueled by wage rises.

The bank left its base rate unchanged at 0.9 percent. Matolcsy said that the Central Bank has three main goals: reach price stability, maintain monetary stability and support the government's economic policies, and the bank has succeeded in all three in the past six years (Matolcsy was appointed Central Bank governor six years ago).

He said that in these six years Hungarian GDP rose by 23 percent, of which 12 percent was attributable to the direct or indirect activities of the Central Bank. Matolcsy also said the bank had no immediate plans to increase the base rate, but will continue to closely monitor macroeconomic trends and act accordingly.

Analysts told Magyar Hírlap that a base rate increase will likely come in the second half of the year.