National Bank of Hungary may slash GDP growth view next month

Budapest, November 26 (MTI) – Hungary’s central bank may cut its economic growth outlook sharply next month, and any easing it adopts in response would probably use non-conventional policy tools, National Bank of Hungary rate-setter Gyula Pleschinger said in an interview with Reuters on Thursday.

“There is a strong chance that our December inflation forecast will project a much lower growth outlook,” said Pleschinger.

In September’s inflation report NBH forecast growth would slow to 2.5 percent in 2016 from 3.2 percent expected this year, but later third-quarter growth came in at just 2.3 percent, missing the market’s and the central bank’s expectations.

“In theory, it is possible that the output gap (between actual and potential economic growth) will close later than at the end of 2017,” as was expected in the September inflation report, Pleschinger said, adding that a clearer picture would emerge in coming weeks.

The central bank will hold its last policy meeting of the year on Dec. 15. Its Managing Director Barnabas Virag told Reuters on Wednesday that the bank could “fine-tune” its monetary easing toolkit next month to counter downward risks to inflation and growth.