Prime Minister Viktor Orban's government is trying to avoid economic recession at a time when inflation is still running well above 20%. Nagy said inflation could slow to single digits by the end of the year. "When there is a turnaround in inflation, I think that the central bank can also justifiably take a turn in policy...and they can start cautiuously reducing interest rates," Nagy said, talking about rate cuts for the second time this week. The central bank declined to comment in an emailed response to Reuters on similar remarks made by Nagy in a weekly newspaper on Thursday.
On Tuesday, the central bank left its base rate at 13% and said it would keep its one-day deposit rate at 18% until it sees "a trend improvement" in risk assessment. The bank is due to release its fresh inflation forecasts in March.
Credit ratings agency S&P on Friday
cut
Hungary's long- and short-term foreign and local currency
ratings to 'BBB-/A-3' from 'BBB/A-2', citing persistently high
inflation and external pressures.
Nagy told the radio that he did not expect a similarly
"drastic" move by Moody's during a debt rating review due in
early March. He also said Hungary's economic fundamentals were
improving, and energy prices have dropped.
(Reporting by Krisztina Than;
Editing by Alison Williams)
