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Matolcsy’s first rate cut

March 29th, 2013

Commentators across the political spectrum discuss the National Bank’s decision to go ahead with regular interest rate cuts and comment on the move of former National Bank President András Simor to the ERBD as a Vice-President.

On Tuesday, the National Bank headed now by former Economy Minister György Matolcsy continued its cautious policy of cutting its base interest rate by 0.25 percentage points to a record low of 5 per cent. Before the Monetary Council’s decision took place, Mr. Matolcsy announced that from now on, the minutes of the rate setting meetings would not be published. In the meantime, it was reported that former National Banker András Simor had been recruited by the ERBD.

The National Bank under Matolcsy’s leadership will now help the government to boost the Hungarian economy, Tamás Nánási comments in Magyar Nemzet. The pro-government columnist welcomes the rate cut which, he believes, will be helpful in increasing growth by stepping up the volume of lending. Nánási notes that the cooperation between governments and National Banks has become mainstream practice throughout the developed world, and by overcoming the past orthodoxy of full national bank independence, Hungary has joined the global financial elite. In an aside, Nánási remarks that the appointment of András Simor as Vice-President of the European Bank for Reconstruction and Development should be seen as a bounty offered to the former Hungarian National Bank President, “who always put the interests of Brussels before those of Hungary.”

Népszabadság in a front page editorial writes that Simor’s recruitment by the ERBD defies his right-wing critics. The left-wing daily notes that Simor was selected from a number of top-notch applicants, and thus his selection by the ERBD indicates that Simor has established an international reputation by acting as a principled and coherent National Bank President.

In Népszava, György Sebes finds it highly alarming that the National Bank has lost its independence with Matolcsy’s appointment as its President. The National Bank, Sebes believes, will follow the orders of PM Viktor Orbán. The left-wing pundit adds that Matolcsy’s decision not to publicly comment on Central Bank rate decisions could in the long run weaken the Forint.

Writing in Magyar Hírlap, Csaba Szajlai welcomes the National Bank’s decision, and points out that the Forint has slightly strengthened after the rate cut. The conservative commentator – who has often criticized the government’s economic policies – adds that Central Banker Matolcsy could earn the trust of investors by publicly explaining the background of rate setting decisions.

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