## Hungary: Selected Issues

_IMF Staff Country Reports, February 3, 2023_

## Source details

**Canonical URL:** [Hungary: Selected Issues](https://www.imf.org/en/publications/cr/issues/2023/02/02/hungary-selected-issues-529093)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/02/02/hungary-selected-issues-529093/index.md)
- [Structured JSON version](/en/publications/cr/issues/2023/02/02/hungary-selected-issues-529093/index.json)
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## Bibliographic details
- Published: February 3, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400231506.002

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### Overview and scope
- Publication date: February 3, 2023
- Pages: 46
- Issue: 071
- Series: Country Report No. 2023/071
- Volume: 2023
- DOI: https://doi.org/10.5089/9798400231506.002
- Stock No: 1HUNEA2023002
- ISBN: 9798400231506
- ISSN: 1934-7685
- Format: IMF Staff Country Reports

### Main analytical focus
- Examines how and why Hungary reached historically high inflation.
- Places particular attention on cross-country comparisons to understand where Hungary may stand out.
- Focus on domestic drivers that could help explain stronger inflationary pressure in Hungary.
- Methodology highlights:
  - Overview of inflation developments over the last two years.
  - Use of an augmented Phillips Curve to estimate the impact of common drivers of inflation.
  - Examination of the role of labor market tightness and policy stances.
  - Analysis of possible changes to the degree of exchange rate pass through in recent years.
- Outcome: exploration of risks to the inflation outlook and policy recommendations drawn from the findings.

### Key findings and dynamics
- Inflation has reached historically high levels in Hungary (documented across the analysis).
- Core findings highlight:
  - Inflation expectations are de-anchored.
  - Core inflation dynamics remain strong.
  - A tight labor market is contributing to persistent domestic inflationary pressures.
  - The lag-effect of prior loose monetary and fiscal policies has boosted domestic demand, reinforcing inflation.
- Empirical strategy includes estimating impacts of common inflation drivers via an augmented Phillips Curve and assessing exchange rate pass-through changes.

### Policy implications and recommendations
- Despite recent tightening, both monetary and fiscal policies need to be consistently and persistently tight to return inflation to the central bank’s target.
- Policy mix recommendation:
  - Maintain a consistently and persistently tight overall policy mix.
  - Address de-anchored inflation expectations and strong core inflation dynamics by sustaining restrictive settings until convergence toward the inflation target is achieved.

### Subjects and keywords
- Subject areas: Asset and liability management, Central bank policy rate, Central banks, Financial institutions, Financial services, Inflation, International organization, Liquidity, Monetary operations, Monetary policy, Mortgages, Prices
- Keywords: B. inflation driver, Central bank policy rate, Europe, food inflation, Global, Inflation, inflation in Hungary, Liquidity, Monetary operations, monetary policy stance, Mortgages, policy stance indicator, producer price inflation

*International Monetary Fund. Hungary: Selected Issues, IMF Staff Country Reports 2023, 071 (2023).*

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## Content in this bundle

- **Hungary: Selected Issues; IMF Country Report No. 23/71; January 17, 2023**
  - [Hungary: Selected Issues; IMF Country Report No. 23/71; January 17, 2023 (Markdown version)](/-/media/files/publications/cr/2023/english/1hunea2023002.pdf.md){rel="alternate" type="text/markdown"}
  - [Hungary: Selected Issues; IMF Country Report No. 23/71; January 17, 2023 (PDF)](/-/media/files/publications/cr/2023/english/1hunea2023002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/02/02/hungary-selected-issues-529093_