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Gov't sees things differently than central bank, but trying to cooperate

The government sees things differently than the National Bank of Hungary when it comes to monetary policy, but it is trying to cooperate with the central bank, Prime Minister Viktor Orbán said during an official visit to Vilnius.

“We think entirely differently about the foundations of the economic policy to be followed, and this causes tensions. The National Bank of Hungary represents the economic philosophy of an age that led to the economic crisis,” Orbán said. The government is striving to stimulate the economy with “unconventional” measures, such as a bank levy and crisis taxes, he added.

“Democracy is like a cafe, where this is always noise and debate, but that is a part of life,” Orbán said, commenting on the central bank's relationship with the government.

The MNB's Monetary Council raised the base rate by 25bp to 5.25% at a meeting on November 29. The rise was the first since the autumn of 2008. They justified the decision citing the high risk premium on Hungarian state debt and the risk of second-round inflation caused by higher food prices and the recently introduced crisis taxes.

The government said the decision was unjustified in light of economic trends and the general government balance, the National Economy Ministry told MTI after the meeting. (MTI – Econews)