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Funding for Growth Scheme modest, but necessary, Matolcsy says

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The "Funding for Growth Scheme" initiated by the National Bank of Hungary (MNB) is a modest, but necessary programme for achieving a turnaround in economic growth, central bank governor György Matolcsy said on Friday, speaking at a stop on a road show in Balatonfüred. Matolcsy stressed that the MNB's set of tools is limited, but the announced measures are necessary for kick-starting sustainable growth. Matolcsy said that Hungary's lending system is "barely functioning". Microbusinesses have no access to credit, or if they do, it is very expensive. He said the MNB could not pose a fiscal burden and had to break even in this year and the next. It is the MNB's obligation to defend the Hungarian financial system if "something goes wrong in the European Union or the world and Hungary comes under attack again", he added. Matolcsy said the "gradualism", "predictability" and "continuity" of the MNB's easing cycle, started last August, was "a good strategy". The MNB's Monetary Council has cut the central bank's key rate by 25bp at each of its monthly rate-setting meetings since the end of last summer.

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