Hungary central bank says ready to support recovery 'with all tools'

BUDAPEST: Hungary's central bank continues to be ready to support economic recovery "with all its tools", the bank's Governor Gyorgy Matolcsy told the daily Magyar Nemzet newspaper in an interview published on Monday.

Matolcsy said the key factor for an economic rebound next year from the shock caused by the coronavirus pandemic will be having the population acquiring sufficient immunity which would help people overcome their fears about the pandemic.

"I am optimistic about the future but we are in the hands of healthcare professionals," he said.

Matolcsy, a close ally of nationalist Prime Minister Viktor Orban, said the investment rate in the economy must be kept above 25% of economic output each year and has to be raised above 27% from 2022 onwards to boost economic growth. For this, both state investments have to be increased and investments by households must be supported, he said.

At its last rate-setting meeting earlier this month, the bank cut its 2021 economic growth forecast to a range of 3.5% to 6% following an expected 6%-6.5% recession this year.

The bank left its benchmark base rate at 0.6% and the overnight deposit rate at -0.05%, as expected.

The bank said it had injected 5.8 trillion forints ($19.56 billion) into the economy this year to fend off the effects of the pandemic, including 1 trillion forints of government bond purchases.

Orban, in power for over a decade, faces tough elections in 2022, fighting the economic effects of the pandemic against an opposition that has unified for the first time to unseat him.