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Hungary's András Simor names Karvalits as deputy

András Simor, who took over as the president of Hungary's central bank on March 3, today named FHB Nyrt Chairman Ferenc Karvalits as one of his deputies and a member of the bank's policy-making Monetary Council.

Karvalits will be in charge of economic and monetary policy, market operations and statistics, the bank said in a statement published on its Web site. Prime Minister Ferenc Gyurcsány has agreed with the nomination and will propose it to President László Sólyom for approval, the bank said. The new deputy will join the bank as inflation is set to accelerate to the fastest pace in six years and the benchmark interest rate is the European Union's highest. Karvalits is unlikely to alter the monetary policy preferences of the other 12 rate setters, economists said. „He's a good boy in the sense that he takes science and the economy very seriously,” said Zoltán Török an economist at the local unit of Raiffeisen International Bank AG. „He won't be the type of deputy who comes up with wild ideas. He doesn't change our view of monetary policy or our outlook.”

Karvalits, 43, with degrees from Columbia University in New York and Corvinus University in Budapest, worked at the central bank between 1996 and 2001 in charge of regulation, banking supervision and foreign currency regulation. He has chaired the FHB board since 2005. He was an adviser to Gyurcsány in 2004 and 2005 and has been among the candidates for the bank's top post. His relations with the premier may help Simor mend relations between the central bank and the government which soured because of former bank President Zsigmond Járai's criticism of budget policy.

„His good relationship with the government suggests he will likely be on the dovish side,” Gyula Tóth, an economist at UniCredit MIB in Vienna, wrote in an e-mail. He will join the policy-making council at a time when rate setters have clashed about monetary policy and the economic outlook. They were divided about the past five rate decisions, with some of them publicly criticizing the majority. Karvalits is replacing György Szapáry, who mostly sided with Járai and against independent members of the council. The terms of the other two deputies who usually voted with them, Henrik Auth and Péter Adamecz, will expire in July. (Bloomberg)