VAN VOSZ VÁLASZ: Is it possible to reduce inflation and interest rates together?

By: Trademagazin Date: 2023. 05. 16. 10:02

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A high inflation and high interest rates hinder business development, economic growth, and catching up. To sustain businesses and promote economic development, it is essential to reduce inflation and interest rates through coordinated action involving the government, central bank, and businesses.

The COVID crisis in 2020 led to economic stagnation due to quarantine measures, affecting both demand and supply. The crisis required restarting the economy, supported by low interest rates and ensuring sufficient liquidity. However, global imbalances and conflicts, such as the Russian-Ukrainian war, disrupted economies and caused humanitarian catastrophes. The resulting high inflation and interest rates have destructive effects on businesses and hinder growth and competitiveness.

Development requires affordable loans and investment. Low-interest credit programs like the Széchenyi Card Program for small and medium-sized enterprises and the Baross Gábor Reindustrialization Program for large enterprises played a crucial role. High inflation and interest rates hamper economic growth, reduce disposable incomes, increase government financing costs, and hinder balanced growth. A comprehensive approach that combines inflation control with targeted development policies, cooperation between the government, market actors, and the central bank can create a favorable economic environment for businesses and stimulate growth.