Hungary’s persistent rise in inflation is risky

It would be a mistake to underestimate the risk of a persistent rise in inflation, National Bank of Hungary deputy governor Barnabás Virág said on Thursday.

Virág noted that inflation is rife around the world partly due to rapid post-pandemic recoveries. Addressing an event organised by fund manager Aegon Alapkezelő, he said, however, inflation had already taken root in the world economy well before the pandemic. Inflation has taken off wherever economic relaunches have been robust, and this is the “price” effective recovery, he said. But recoveries could be jeopardized were inflation to become onerous, he warned.

The lesson for Hungary’s central bank is that the risk of inflation must be addressed

and safeguards put in place in case large central banks narrow their asset purchase programmes, he said.

Meanwhile, the European Commission has approved, under European Union state aid rules, Hungary’s map for granting regional aid from 1 January 2022 to 31 December 2027, the EC said on Thursday. Hungary’s regional aid map defines the Hungarian regions eligible for regional investment aid based on being the most disadvantaged regions, and establishes the maximum aid intensities in the eligible regions, the EC said. Under the revised Regional aid Guidelines (RAG),

regions covering 82.09 percent of the population of Hungary will be eligible for regional investment aid.