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BUDAPEST, Oct 6 (Reuters) - A return to higher levels of inflation may not happen even with extraordinary stimulus measures by central banks because of structural factors such as ageing populations, Hungarian central banker Barnabas Virag said on Thursday.
"It is clear that there are serious structural forces at play, which contribute to inflation being this low, such as globalisation and changing demographic trends," Virag told a conference organised by financial news website portfolio.hu.
"We have been saying for two years that we expect to reach our inflation target on a two-year horizon," said Virag, who is managing director of the National Bank of Hungary.
"The Japanese have been saying this for 20 years."
Faced with inflation near zero, Hungary's central bank has lowered its base rate to a record-low 0.9 percent and aims to squeeze hundreds of billions of forints out of its main liquidity tool into the economy by the end of this year.
Its next policy meeting is due on Oct. 25.
The bank has said it would not cut its base rate further but use targeted unconventional tools to ensure inflation approaches its 3 percent target, now expected around the middle of 2018.
Hungary imports low levels of inflation due to weakness in the euro zone, its main trading partner, as well as a fall in oil prices. Like many richer countries, its population is projected to fall by millions by the middle of the century based on current trends, from just below 10 million now.
Virag said these broader factors could result in sustained weaker price growth in the longer run and the return of higher inflation levels "should not be taken for granted".
Signs that structural changes are weakening central banks' influence over inflation and growth raise questions about the viability of inflation targeting, the cornerstone of modern monetary policy. The topic will be among those discussed at the International Monetary Fund's annual meeting this week.
Hungary's annual headline inflation ran at -0.1 percent in August.
Virag said the central bank hoped that its latest measure to limit the amount of funds commercial banks can park in its main liquidity instrument would also contribute to higher lending in the economy or at the very least reduce bond yields.
The central bank expects average annual inflation at 0.4 percent this year, and 2.3 percent in 2017. (Reporting by Gergely Szakacs; Editing by Catherine Evans)