March 13, 2017 / 3:24 PM / 4 months ago

Hungary central says fiscal policy probably too tight

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BUDAPEST, March 13 (Reuters) - Hungary should not undershoot its budget deficit target this year, the central bank said on Monday, after a lower-than-expected deficit of about 1.3 percent of economic output in 2016 shaved 0.6 percentage point off economic growth.

January-February figures indicate risks of a repeated deficit undershoot and a loss in the pace of an expected pick-up in growth this year, central bankers, including Deputy Governors Marton Nagy and Laszlo Windisch said in a study.

"Monetary policy has reached its limits. Therefore, there is increasing need for other economic stimulus effects," they said, adding that Hungary would also need reforms to improve competitiveness and productivity in the private sector. (Reporting by Sandor Peto and Gergely Szakacs)

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