Sources confirm upcoming appointment of two new members to Hungary's Monetary Council
The two candidates will be heard by the Parliament's Economic Affairs Committee next Monday, so Éva Búza is expected to be able to vote at the 28 March (next Tuesday) rate-setting Monetary Council meeting, if her formal appointment is made by then.
Éva Búza will replace the outgoing Bianka Parragh, whose six-year mandates has expired on 23 March and Zoltán Kovács will replace György Kocziszky, whose mandate expires on 6 April, so Kovács will only be able to join the MPC next month.
Éva Búza is currently the CEO of the state-owned credit insurer Garantiqa Hitelgarancia Zrt., while Zoltán Kovács previously worked in the management of Magyar Posta and has a successful business career.
Reuters notes that since the nine-member panel has always decided unanimously on interest rates in recent years, the arrival of the two new members is unlikely to upset the balance of power in the decision-making process, even though there have been repeated signals from the government recently calling for a rate cut.
It will be also important to hear what the two new candidates have to say about the outlook for inflation and interest rate cuts, as this could be the first sign that the government-central bank rift that has been unfolding in public could be reflected in the Monetary Council's decision-making, the news agency added.
The recent rift between the Viktor Orbán-led cabinet and the György Matolcsy-led central bank has manifested in verbal and regulatory back-and-forth action. Government officials have been urging the MNB to cut rates, while Matolcsy slammed the cabinet for what he calls its misguided economic policy.
Theoretically, all policymakers are trying to rein in inflation which soared to the highest level in the European Union (to over 25%), only they disagree on the tools that would help curb the consumer price index.
The government is putting pressure on the MNB to loosen monetary policy conditions and so help the economy recovery from an ongoing recession, while the central bank dug its heels in and would not lower its EU-high 18% benchmark interest rate, arguing that one of its priorities is to combat inflation.
Earlier this week, the government excluded large local investors (with deposits of over HUF 20 mn) and various institutions including retail banks from putting cash in central bank credit facilities carrying 18% interest. The cabinet also extended a ceiling on interest that commercial banks can pay on deposits until end-June, which it said was aimed at eliminating a loophole benefiting high-net worth clients.
In his latest acerbic comments against Orbán's administration, Matolcsy said yesterday that “the cost of many government decisions exceed their benefits, but they can be corrected.”
Cover photo: Getty Images
