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More controversy over the National Bank chief

February 8th, 2013

A left-wing columnist suggests that the National Bank will surrender its independence after the appointment of its new president next month. A conservative pundit doubts that the National Bank has much room to stimulate growth through monetary policy as hoped for by the government.

On Tuesday, Világgazdaság reported that PM Orbán would nominate Minister of the Economy György Matolcsy as the new head of the National Bank. Within hours, the Forint weakened from 291.5 to 296 to the Euro. Later during the night, Fidesz strongly denied that a decision had been made regarding the National Bank succession. After the announcement, the Hungarian currency exchange rate stabilized at around 294 to the Euro. Financial analysts interviewed by Népszabadság contend that by leaking the “news” about Matolcsy”s nomination, the government wanted to probe investors’ reactions. Minister Matolcsy has earlier suggested that central banks must actively help economic recovery by easing monetary policy, among other policy tools (see BudaPost January 17).

In Népszava, János Dési contends that, after all, it does not really matter whether or not PM Orbán decides to nominate Matolcsy as the head of the National Bank. The left-wing pundit suggests that András Simor’s successor will inevitably be an incompetent and subservient puppet of the Fidesz government, and will do his best to subordinate monetary concerns to the short-sighted plans of the government.

, Csaba Szajlai writes in Magyar Hírlap. The conservative commentator, who has been highly critical of the government”s hesitation to reach a deal with the IMF, remarks that central banks throughout Europe and North America have been actively helping their economies by extensive monetary easing programs. According to Szajlai, however, the new head of Hungary’s issuing bank will have little leeway for stimulating growth by monetary means. The National Bank needs to maintain price stability, otherwise the Forint will plummet, which would increase the burden on both the state and on Hungarian families indebted in foreign currencies. He adds that monetary easing and interest rate cuts alone do not guarantee faster growth without a favourable business environment.

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