The Hungarian National Bank should reassess its medium-term inflation target of 3%, according to the country’s Development Minister Marton Nagy on Thursday, further pressuring the central bank, which has opposed such a move.

The former central bank deputy governor went on to say that with full employment in the developed world and tight labour markets in the region, previous inflation rates of approximately 3% could not be restored, Reuters news agency reports.

“The recovery is hampered by high-interest rates, which is especially painful in the corporate sector,” Nagy commented during an economic conference.

Hungary’s central bank reduced its base rate by a larger-than-forecast 75 basis points in October, prolonging an easing cycle that got underway in May. Since then, rates have declined by a total of 575 basis points to 12.25%, which remains the highest benchmark in the European Union.

Nagy forecasts inflation to stand at between 5% and 6% in 2024 and added he wanted to start a debate on the issue, echoing his call for a review of the inflation target. However, Governor Gyorgy Matolcsy said this would be “financial suicide.”

Furthermore, earlier this week, one of the governor’s deputies, Barnabas Virag, reiterated the central bank’s opposition to such a move.

“At the moment, we do not see any reason for a need to modify the inflation target,” Virag stated, going on to add that for an emerging economy like Hungary, it was risk-laden to start a public debate about this issue during such a period of volatility.

The central bank deputy also said that the country’s economic growth could be restored by reducing inflation.