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Lower base rate would not cause significant weakening of forint

A central bank base rate of 4.50% would not cause a significant weakening of the forint, OTP Bank CEO Sándor Csányi said in an interview with public radio MR1 early Friday.


Csányi told MR1 that the central bank base rate is only a sign for the market, but market rates and the base rate diverge.

Earlier in the week, György Matolcsy, the Fidesz-KDNP alliance's candidate for economy minister, told a parliamentary committee that real economic trends in Hungary would justify a central bank base rate of 4.50% and stressed that the new government's goals could not be reached without a reduction in the National Bank of Hungary's key rate.

The MNB's Monetary Council has cut the base rate a combined 425bp at each of its meetings since July, bringing it to a historical low of 5.25%.

Csányi said Hungary did not need to rush into the eurozone if the government maintains a tight fiscal policy, adding that losing "room to manoeuvre" would put the country at a disadvantage. He said an appropriate parity rate for the forint would be 280-290.

The average HUF/EUR exchange rate was 266.28 in April, the latest MNB figures show. (MTI-ECONEWS)