MNB governor calls for EU commissioner’s resignation


At a business conference, National Bank of Hungary (MNB) governor György Matolcsy yesterday called for the resignation of European Commissioner for Economic and Monetary Affairs Olli Rehn due to what Matolcsy labeled “the European Union’s faulty economic policy.”

The central bank governor also said he had called on the larger international ratings agencies to start talks on upgrading Hungary. Earlier this month, Standard and Poor’s affirmed its negative outlook on Hungary, while Moody's has kept Hungary in the “junk” category for most of this year.

Matolcsy stated that the EU should adopt fiscal policy geared toward the inflation target, suggesting that the EU should set a 25% investment-rate target and switch to a 2%-4% inflationary-target system.

Further reduction to base rate possible
At the same conference, Matolcsy went on to state that further reduction to the base rate is possible, as Hungary has maneuvering room thanks to an inflation rate lower than the Central Eastern European average.

Reuters report quoted Matolcsy as stating that no internal reasons for a rate increase exist, “as long as the inflation targeting system projects an inflation outlook in the medium term that does not justify [a rate hike].” The governor assured, however, that the MNB currently forecasts low inflationary pressure for the medium-term future.

According to Matolcsy, the MNB’s flexible monetary policy features only one anchor: The 3% base rate target.

–material from MTI was used in this article

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