IMF sees scope for Hungary cbank monetary easing

Budapest (MTI) – Hungary’s central bank should consider a further cautious monetary easing in the face of persistent disinflationary pressures, the International Monetary Fund (IMF) said in its annual preliminary monitoring report, released on its website on Friday.

Hungary’s economy is coming back from the crisis but the road to strong, sustained activity and higher private sector employment is still a long one, the IMF said in its concluding statement.

It said that Hungary’s macroeconomic policies have contributed to a welcome reduction in vulnerabilities, strong growth and a reduction in unemployment.

“But the country remains susceptible to shocks and its medium-term growth prospects are subdued,” the IMF report said.

This offers policymakers an opportunity “to re-calibrate policies to address the remaining vulnerabilities and structural weaknesses,” the report said.

All this requires gradual fiscal consolidation based on more efficient, equitable and growth-oriented public expenditure and tax policies.

Progress on the fiscal front needs to be complemented with structural reforms to unleash Hungary’s growth potential and improve its attractiveness as a place for domestic and foreign entrepreneurs to create more jobs and innovate, said the report.

“Sustaining strong growth will also require preserving price stability and reviving financial intermediation, including by improving the operating environment for the banking sector,” it said.

Source: http://mtva.hu/hu/hungary-matters