IMF Staff Country Reports

Hungary: Selected Issues

August 2, 2024

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Format: Chicago

International Monetary Fund. European Dept. "Hungary: Selected Issues", IMF Staff Country Reports 2024, 269 (2024), accessed December 26, 2024, https://doi.org/10.5089/9798400286537.002

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Summary

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.

Subject: Corporate sector, Economic sectors, Income, Income inequality, Inflation, National accounts, Prices

Keywords: Beta convergence, Convergence in Hungary, Corporate sector, E. impulse response, Europe, Global, Income, Income convergence, Income inequality, Inflation, Monetary policy shock

Publication Details

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