Kóka on the exchange rate band

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In an interview to news agency Bloomberg, Hungarian Economy Minister János Kóka said that sticking to the exchange rate band has negative effects on efforts to curb inflation. 

Kóka later refuted interpretations saying that he meant to see the trading band of the forint abandoned. It is not on the agenda at present but there certainly is a conflict between the forint's trading limits and the central bank's inflation targeting policies, Kóka said, adding that what he would really like to see, is a discussion of the issue between monetary decision makers and market players. Central bank (MNB) president András Simor earlier said that inflation can be kept under control without scrapping the band, though he admitted that inflation targeting and the existence of trading band is theoretically in contrast. A free floating forint would soon start strengthening and import prices would be down and so would inflation, traders say. The rate band at present: is defined by mean rate +/– 15 %, i.e. between Ft 240.01 and Ft 324.71 against the Euro. (Gazdasági Rádió, Magyar Hirlap, Napi Gazdaság)

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