Hungary rate-setters brush off speculation of rift

Interview

Two members of the National Bank of Hungary's Monetary Council dismissed speculation that there is sharp division among the central bank's rate-setters in an interview with Dow Jones on Tuesday.

Ferenc Gerhardt and György Kocziszky, who are external members of the Council, said the speculation – fueled by a number of non-unanimous votes in recent months – was untrue.

"Sometimes markets interpret a non-unanimous rate decision as a huge break within the Monetary Council. This is simply nonsense," Gerhardt told Dow Jones.

Kocziszky called the speculation "harmful" and said reports of tension between the Council and the MNB staff was the stuff of "urban legend".

"This would be a like a pilot not wanting to talk to his mechanic. I need to base my decisions on the research of the staff and this wouldn't work if there was a rift," he said.

Gerhardt said credibility was a "fundament of Monetary Council members' job description". "We must convey responsibility, predictability and drive the economy in a positive direction. Monetary Council members must disregard all other considerations," he added.

The Monetary Council has four external members and three internal members. At a rate-setting meeting in January, all three internal members voted to raise the bank's key rate by 50bp to 7.50% while the external members voted to keep the rate on hold.

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