Hungary central bank says more subdued recovery could dampen domestic inflation

Credit: REUTERS/Bernadett Szabo

Hungary's central bank has laid out two alternative scenarios around its baseline projection in the September inflation report published on Thursday, one of which sees lower domestic inflation but a much more subdued economic recovery.

BUDAPEST, Sept 24 (Reuters) - Hungary's central bank has laid out two alternative scenarios around its baseline projection in the September inflation report published on Thursday, one of which sees lower domestic inflation but a much more subdued economic recovery.

"The alternative scenario that presumes a ‘W’-shaped recovery from the economic downturn caused by the global coronavirus pandemic points towards slightly lower domestic inflation and considerably more subdued growth paths compared to the baseline scenario," the bank said.

In the other alternative scenario featuring an increase in risk aversion towards emerging markets, inflation is higher than in the baseline forecast, it added, without revealing policy implications to the scenarios.

The bank said core inflation excluding indirect taxes, a key inflation gauge for the bank, will be 3.7%–3.8% in 2020, 2.9%–3.1% in 2021 and 2.9% in 2022.

(Reporting by Krisztina Than)

((krisztina.than@thomsonreuters.com;))

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