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Hungary’s central bank has said it expects inflation will continue rising in the remainder of the year, though from October its upward pace will start gradually easing. To a large degree, inflation is expected to be driven by factors outside of the scope of monetary policy, central bank director András Balatoni said on Thursday, presenting the NBH’s latest quarterly Inflation Report.
Disinflationary effects will start showing up in the first half of 2023 and become more pronounced in the second half of 2023, he added. Headline inflation will fall to 4%, the upper threshold of the National Bank of Hungary’s tolerance band, in the first half of 2024, he said. Annual inflation this year is expected to average 15.0-15.5%, before declining to 10.6-12.9% in 2023 and 2.6-3.5% in 2024, the report shows. The bank expects economic growth at 3.0-4.0% in 2022, slowing to 0.5-1.5% in 2023 and then picking up to 3.5-4.5% in 2024. It projects a decline in investments and in household consumption expenditures in 2023. Household savings are also expected to fall temporarily. Balatoni said Hungary’s current-account deficit would “rise markedly” in 2022 owing to higher energy prices. The NBH forecasts a current-account deficit equivalent to 7.7-8.7% of GDP for 2022 and a gap of 5.8-7.0% for 2023.