Inflation has jumped in the countries where the economy has restarted, including Hungary, but rapid and proactive interest rate hikes will reduce the rate of price increase from the beginning of next year, a top official of Hungarian central bank MNB has said.
"The base effects will also dampen the data," Andras Balatoni, head of the economic forecasting and analysis department of the MNB, told a press conference on Thursday while presenting the bank's latest inflation report.
Inflation will be above five percent until December, and core inflation will also be on an upward path, exceeding four percent in the last month of the year, he predicted.
However, "the central bank may reach its three percent inflation target in the second half of next year," Balatoni said.
Higher wage growth and more dynamic consumption growth, coupled with persistently high external inflationary effects, are all factors that keep pushing up inflation, but the fourth wave of the coronavirus
epidemic could slow down the economy and thus lower the risk of inflation, he said.
According to the MNB's report, inflation will be in the range of 4.6-4.7 percent this year, 3.4-3.8 percent in 2022, and 2.8-3.2 percent in 2023.
Balatoni said the Hungarian economy was on a rapid recovery track, but the outlook for the fourth quarter was uncertain due to the pandemic.
GDP growth could be as strong as eight percent in the third quarter of 2021, he said, adding that for the whole year, MNB expected GDP growth of 6.5-7 percent. The expectations for 2022 and 2023 are 5-6 percent and 3-4 percent, respectively.