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Books and Analytical Papers > IMF Staff Country Reports

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Cover IMF Staff Country Reports
Hungary: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper presents monetary policy analysis with a quarterly projection model (QPM) in Hungary. The standard QPM is adapted to reflect some specific features of the Hungarian economy and post-Covid set of shocks. Inflation is modelled in greater sectoral detail, including the separation of core goods and services, to capture differences in their drivers and dynamics and to model spillovers of shocks from one sector to another. Following a period of large interest rate reductions, the projections from the QPM suggest that the next phase of monetary policy normalization should proceed cautiously and more gradually. Results from the model should be used alongside other forms of analysis and expert judgement in determining the optimal path of monetary policy. Data should be watched keenly to assess the realism of the model’s projections.
Keywords:
income convergence; E. impulse response; convergence in Hungary; beta convergence; monetary policy shock; Inflation; Corporate sector; Income; Income inequality; Global; Europe
Cover IMF Staff Country Reports
Hungary: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that Hungary is emerging from a period of shocks. The pandemic, Russia’s war in Ukraine, and crisis-related stimulus widened fiscal and external imbalances and triggered double-digit inflation in 2022. Thanks to an effective monetary policy response aided by falling commodity prices and a tighter fiscal stance in 2023, inflation came down significantly, while the labor market and financial sector remained resilient. Despite some progress, the ongoing negotiations on the super milestones, including the Commission’s assessment of governance conditions, are delaying the disbursement of EU funds, which are vital for digitalization, regional integration, and the green transition. A credible and growth-friendly fiscal adjustment plan is needed to safeguard macroeconomic stability. Monetary policy should remain in restrictive territory to deliver a sustainable return of inflation to target. Coordinated policy approach is needed to improve Hungary’s productivity, reduce regional inequality, strengthen governance, and advance the green transition.
Cover IMF Staff Country Reports