The central bank raised its forecast for growth of household consumer expenditures next year to 5.0 percent from 3.8 percent in the previous Inflation Report published in September. The NBH raised its projection for investment growth to 11.2 percent from 8.3 percent.

It said the decline in the relative price of capital and the low interest rate environment would encourage investments that boost productivity. Investments will increase in 2017 and 2018, following a decline in 2016, it added.

The NBH released the main figures of the Inflation Report after a policy meeting on Tuesday. It raised its projection for average annual inflation next year to 2.4 percent from 2.3 percent in the previous report released in September.

A fan chart published with the data show the 3 percent mid-term inflation target will be met early in 2018, rather than in the middle of 2018.

The NBH also raised the projection for GDP growth in 2017 to 3.6 percent from 3.0 percent. In its first forecasts for 2018, the NBH projects average annual inflation of 3.0 percent and GDP growth of 3.7 percent.

The bank said it expects the spillover effect of a recent agreement on increases in the minimum wage for skilled and unskilled workers to raise private sector wage growth by 2.5 percentage points next year.

It raised its projection for average gross wage growth in the private sector next year to 8.5 percent from 6.0 percent in the previous report published in September.

Republished with permission of Hungary Matters, MTI’s daily newsletter.