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BUDAPEST, April 13 (Reuters) - Hungarian central bank
governor Gyorgy Matolcsy and Finance Minister Mihaly Varga held
talks on Thursday about ways to wrestle down inflation and
reduce borrowing costs, the ministry and the central bank said
in a joint statement.
With Hungary's economy headed for stagflation this year,
Prime Minister Viktor Orban's government has put growing
pressure on the National Bank of Hungary to start lowering
borrowing costs to help the economy recover.
The bank has defied those calls and last month, like its
peers elsewhere in central Europe, doubled down on its hawkish
stance, ruling out any near-term easing in the face of inflation
still running above 25% based on March data.
Thursday's statement said continued close co-operation of
fiscal and monetary policy was important to tackle the economic
fallout from the war in Ukraine.
"The joint effort will contribute to breaking down
inflation, lowering interest rates, further reducing the deficit
and debt and return to a path of balanced growth."
Matolcsy and Varga have agreed to hold regular talks on
strategic issues, the statement said.
Hungary's headline inflation eased for a second straight
month in March but stubbornly held near two-decade highs above
25%, signalling interest rates may need to stay high for longer
to push price growth down.
The Hungarian central bank has the European Union's highest
base interest rate, at 13%, alongside one of the strongest
inflation rates, which has sapped consumer demand and tipped the
economy into technical recession.
The economic slowdown and high borrowing costs have prompted
Orban's government to repeatedly call for interest rate cuts,
though the bank has said the base rate should be maintained for
a prolonged period.
The central bank forecasts average inflation will fall to
within a range of 15.0-19.5% in 2023 before dropping to 3.0-5.0%
in 2024.
(Reporting by Gergely Szakacs and Krisztina Than; Editing by
Christina Fincher)
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