Emerging Europe analysts at JP Morgan said that “both are credible choices, in our view, and should help to further ease concerns that the new appointments would be politically motivated and mandated to cut interest rates”. “We maintain our long-standing view that changes to the composition of the MPC will not alter the course of monetary policy and our call remains for policy rates to remain on hold in coming months”.
The nominees’ respective backgrounds and their comments at Monday’s parliamentary hearing suggest that Janos Cinkotai might join the “more hawkish camp” on the MPC – the governor and the deputy governors – while György Kocziszky “strikes us as more of a dove”. This should allow the previous dove-hawk balance on the M% to be broadly maintained, analysts at JP Morgan in London said.
Eurasia Group said it expects a more dovish monetary policy trajectory, “but not radically so”.
London-based analysts at Goldman Sachs said that while “little is known about the four new members’ views on monetary policy”, three of them have MNB experience, suggesting more familiarity with monetary policy issues than was initially thought, and this is “positive news”.
Still, “we believe that in its new composition, the M% will be more dovish and more inclined to ease policies should conditions permit … but we do not think the new MPC would risk radical steps that would weaken the forint as this would come at a political cost to the government and worsen the inflation outlook”, Goldman Sachs’s London-based analysts said.
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