Marton Nagy, Hungary’s Economy Minister, said the country has managed to overcome its inflationary crisis, as recent data indicate. The announcement comes after Hungary saw the highest inflation rate in the European Union last year, which has since shown signs of slowing, moving closer to the central bank’s target.
Nagy, who previously served as central banker, mentioned that the Hungarian government would continue to closely monitor inflation. However, the focus now is on boosting economic growth, which has been slower than expected after the inflation-induced slowdown of the previous year.
At a business conference, Nagy expressed confidence in Hungary’s inflation management, saying: “While many question our claims that we have managed to bring inflation under control and that it will remain under control, this seems more and more certain in view of the latest results and data.” He also suggested that favorable inflation trends were likely to have continued into September.
Economists had forecast an annual inflation rate of 3.1% for September, closely aligning with the National Bank of Hungary’s (NBH) target of 3%, with a margin of variation of one percentage point on either side.
Despite the positive outlook shared by Nagy, NBH took a more cautious stance. The central bank, which has cut borrowing costs by a total of 1,150 basis points in its current cycle, stressed the need for a cautious and patient policy approach, advising against overreacting to the easing of interest rates. the American Federal Reserve.
NBH has also forecast a rebound in core inflation to around 5% by the end of 2024 and anticipates that its preferred measure of underlying price trends could still exceed 3% next year.
The Hungarian forint, which is the worst performing currency in Central Europe, has depreciated by more than 4% against the euro this year. Additionally, this week the forint hit its lowest level against the euro since the NBH started cutting rates in May 2023.
Reuters contributed to this article.
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