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Markets do not expect Hungary to quell inflation

Tuesday, January 3, 2023

Significance

This was legislating by decree; the announcement gave few details of the changes from the budget passed in parliament in mid-2022. The announcement did say an increase in the deficit target to 3.9% of GDP was due to the rising cost of protecting households from higher energy bills. It was accompanied by just one table without any data from the previous period for comparison.

Impacts

  • Hungary’s inflation rate is likely to remain higher for longer than in other EU member states.
  • Uncertainty will continue to surround the currency.
  • Since the 2022 elections it has not been clear where responsibility for economic policy lies.

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