Bank of Hungary may start lowering interest rates
2023.01.29 05:49
Bank of Hungary may start lowering interest rates
By Kristina Sobol
Budrigannews.com – The minister for economic development stated on Sunday that while annual inflation in Hungary is anticipated to rise above 25% in January, price growth will begin to slow in February, allowing the central bank to gradually begin lowering interest rates.
State radio was told by Marton Nagy, a former deputy governor of the central bank, that the “very high” interest rates made it difficult for the government to do its job and hurt the economy.
At a time when inflation is still well above 20%, the government of Prime Minister Viktor Orban is attempting to avoid an economic recession.
By the end of the year, Nagy predicted, inflation could drop to single digits.
“When there is a turnaround in inflation, I think that the central bank can also justifiably take a turn in policy…and they can start cautiously reducing interest rates,” Nagy said, referring to interest rate reductions for the second time this week.
The central bank declined to comment on Nagy’s Thursday comments in a weekly newspaper that were similar.
The central bank said on Tuesday that it would keep its base rate at 13 percent and its one-day deposit rate at 18 percent until it sees “a trend improvement” in risk assessment. In March, the bank is scheduled to announce new inflation projections.
S&P cut Hungary’s long- and short-term foreign and local currency ratings on Friday from ‘BBB/A-2’ to ‘BBB-/A-3’ due to persistently high inflation and external pressures.
Moody’s (NYSE:) did not anticipate a similarly “drastic” move, Nagy stated on the radio. during a debt rating evaluation that is due in March. Additionally, he stated that energy costs have decreased and that Hungary’s economic fundamentals were improving.
