There is no reason for the central bank to change its cautious stance on interest rate cuts, new vice president of the National Bank of Hungary Ádám Balog told Dow Jones wire service on Wednesday, adding that the cautious and gradual interest rates cuts have so far proved successful. Balog noted that the recent fluctuations of the forint exchange rate are “unwelcome,” and the recent fluctuations are not justified by economic fundamentals. He pointed out, however, that the central bank has no exchange rate target, the forint rate is determined exclusively by demand and supply factors. Monetary Council members do not take into account the short-term fluctuations of the forint rate, only the long-term trend and its effect on inflation, Balog added. Balog emphasized that the Hungarian financial system is stable and resilient to external shocks. Balog’s comments followed the recent considerable weakening of the forint, which rose to above 305 to the euro for the first time in nine months on Tuesday.
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