Soaring inflation to devastate the Hungarian economy?

Hungary’s central bank was among the first to warn of sustained global inflationary pressures, and it was the first in the European Union to launch a cycle of rate hikes, said Csaba Kandracs, deputy governor of the National Bank of Hungary, in an interview. published by the economic news portal napi.hu, adding that an inflation rate of 7.4% in November was expected.

“We must be prepared to fight persistent inflation. Timing, consistency and determination will be the key to success. We will continue to do whatever is necessary, ”Kandracs said.

He said Hungary’s financial stability was strong in the current period of crisis and that banks, insurance companies and funds were well positioned to weather the storm.

The deputy governor said inflation in Hungary would likely return to the bank’s tolerance range below 4% by the end of 2022, although core inflation may take longer to start. to decline considerably, probably from the second half of next year.

Further increases in interest rates are therefore necessary,

he said.

Kandracs said the moratorium on loan repayments amounted to around 4% of the total loan portfolio, or 672 billion forints, and that the banking system was well protected in this regard.

He said the economy was doing well, the job market was tight and wages were rising, while the level of reserves was adequate. There was no reason to maintain the ban on bank dividend payments, he said, adding that dividend payments could start from January.