Economic Stability by Cautious, Data-Driven Monetary Policy

“In the uncertain economic environment, Europe must pursue a cautious macroeconomic policy, while at the same time strengthening its competitiveness by fostering innovation,” National Bank of Hungary (MNB) Governor Mihály Varga stated at the IMF’s annual meeting, MNB says on its website.

He underlined that Hungary’s economic outlook had improved significantly in the recent period, but that elevated energy prices and global uncertainty continued to warrant a cautious, data-driven monetary policy.

Governor Varga explained that inflation was expected to remain below the central bank’s 3-percent target this year, while real economic growth may accelerate significantly. The MNB’s primary objective continued to be the achievement of price stability, which was also necessary for euro adoption.

At its last meeting in September, the Monetary Council had lowered its inflation target to 2.5 percent, which may result in a more predictable economic environment and persistently low inflation level over the long term. Discussing the future introduction of the euro, the MNB Governor underlined that in determining the right time for joining, one must consider when the potential benefits outweighed the related costs. He stated that one prerequisite for successful adoption was adequate preparation and economic convergence, and the MNB was contributing to this by maintaining financial stability.

As part of the program, Governor Varga held a bilateral meeting with Mateusz Szczurek, Director of the European Department at the IMF, as well as Timur Suleimenov, Governor of the National Bank of Kazakhstan, within the framework of which the Hungarian and Kazakh governors signed an agreement to strengthen long-term cooperation between the two country’s central banks.