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Hungary keeps rates unchanged, raises GDP growth forecasts

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Hungary keeps rates unchanged, raises GDP growth forecasts

The Hungarian central bank maintained its interest rates Dec. 17, while raising its GDP growth outlook through 2021.

Magyar Nemzeti Bank kept the central bank base rate, overnight collateralized lending rate and one-week collateralized lending rate at 0.90%, and the overnight deposit rate at negative 0.05%.

It also raised its GDP growth forecasts to 3.7% and 3.5% for 2020 and 2021, respectively, from prior projections of 3.3% for both years. For 2022, the central bank expects the economy to expand 3.5%.

The upbeat projections are on the back of prospects for strong wage growth and robust investment activity. Net exports are also anticipated to make positive growth contributions between 2020 and 2022.

On the price front, the central bank said risks to its inflation outlook became balanced amid buoyant domestic demand and muted external activity.

In November, headline and core inflation rates accelerated to 3.4% and 4.0%, respectively, from 2.9% and 4.0%, in October. The central bank expects the consumer price index to rise again until January 2020, before stabilizing around the 3% target.