The Bank continually develops the models it uses to produce its projections and incorporates the results of international best practice into its work. Consistent with the practice of leading central banks, the enhanced model captures economic processes from the perspective of monetary policy reacting to events. In the past the Report presented the likely path of the economy assuming unchanged monetary conditions (i.e. assuming that the policy rate and the exchange rate are constant). By contrast, the new format Report takes into account the reaction of monetary policy to macroeconomic developments. Consequently, in terms of monetary policy decision-making, the interest rate path required to bring inflation to the target will constitute the most important part of the Report instead of the inflation projection.

The interest rate path projected by the Bank’s staff – which will remain just one element of the decision-making process – will not be published. Nevertheless, in the future the Report will also provide qualitative information on the size of interest rate adjustments required to meet the inflation target, in addition to providing guidance on their direction. This will not only enhance the efficiency with which the Bank communicates its policy but will also provide users with clearer information, making its projections more easily comparable with those of other forecasters.

The Report will be published in its new format in Hungarian and English for the first time at 10 a.m. on 30 March.