Many risks are visible in the economy

By: Trademagazin Date: 2024. 03. 07. 11:43

According to the current prospects, the annual average annual inflation this year may be 4.2 percent, but many risks must be taken into account. For example, with the forint, which broke out of its previous band in a weakening direction in the recent period, as a result the euro was above HUF 395 – said Dávid Németh, senior analyst at K&H, at the event organized by the financial institution. Among other things, the specialist also revealed when the central bank’s room for maneuver may be narrowed.

Dávid Németh, senior analyst at K&H, also spoke about the weakening of the forint seen in recent days, as well as the development of inflation and interest rates, at the press event held at the Museum of Fine Arts in Budapest on Thursday. The current labor market situation also played a prominent role in the specialist’s presentation.

What can the central bank do?

“Several factors contributed to the decline of the forint seen in recent days and weeks. Due to the reduction of interest rates, the premium offered by the Hungarian currency decreased, and the willingness to take international risks also decreased. As a result of all this, the forint broke out of its previous band in a weaker direction. Thus, the exchange rate of the euro crossed the HUF 390 level in the first round, and then went above HUF 395. We can say that in the short term, the euro may be quoted between HUF 386 and HUF 400. However, it is important that several risks are visible that point in the direction of further weakening of the forint”

said the specialist. In the current forint market situation, the fundamentals of the Hungarian economy, such as the state of the budget, the development of the national debt, and the growth potential, are becoming increasingly important due to the reduction of the interest rate advantage.