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Another MNB interest rate cut

November 1st, 2012

A pro-government commentator says Hungary needs lower interest rates and welcomes the approaching end of András Simor’s era in the National Bank.

The Hungarian National Bank (MNB) lowered its main interest rate by 25 percentage points, to 6.25, on October 30th. The Monetary Council was split, with MNB President András Simor and his two vice-presidents, appointed by the previous government voting against the cut, while the four Fidesz-appointed members voted in favour. That has been the third cut over the last three months.

In his Magyar Nemzet editorial, Tamás Nánási describes the decision as a victory of the pro-government council members over „Simor and co”. Although the MNB’s main statutory duty is to protect the value of the national currency, which means at present keeping inflation under 3 per cent, Simor has not once managed to achieve that goal in five years, although he has insisted on keeping the interest rate high, while Hungarian enterprises are desperate for lower interest rates. On the other hand, Nánási accuses the Bank President of tolerating the depreciation of the Forint: „all he did was to ring IMF and then watch with indifference as people struggled with their mortgage payments”. All in all, he believes that when Simor’s term expires next Spring, The Hungarian National Bank can finally become truly Hungarian and National.

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