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Reuters
13-05-2025
- Business
- Reuters
Hungary submits bill expanding central bank panel, cutting disputed non-core activities
BUDAPEST, May 13 (Reuters) - Hungary's ruling Fidesz party on Tuesday unveiled legislation to enlarge the central bank's rate-setting Monetary Council, a move that could boost Prime Minister Viktor Orban's sway over policymakers beyond a 2026 election likely to be closely fought. The legislation was woven into a reform bill stripping the bank of non-core activities that have drawn police scrutiny. Published on parliament's website, the legislation showed the Monetary Council would be expanded with the addition of a fourth deputy governor and another policymaker, enlarging the rate-setting panel to 11 from the current nine. Orban's former finance minister, Mihaly Varga, took over at the bank from Gyorgy Matolcsy in March amid risks to inflation and economic growth, and police began an inquiry into suspected misuse of public funds at a foundation set up under Matolcsy. In a statement, the central bank welcomed the legislation, which it had proposed, though it did not comment on the issue of the expansion of the Monetary Council. Deputy bank governors are nominated by Orban, meaning the rate-setting panel would be dominated by policymakers picked by him or his party for the next six years as the veteran leader gears up for a re-election bid expected to be challenging. Faced with an inflation rebound to the EU's highest levels at the start of 2025, Orban launched food price controls in mid-March, while calling on banks and telecoms companies to curb prices to arrest hefty services inflation. In power since 2010, Orban has frequently intervened over prices and borrowing costs to shield consumers from what his government has said are unjustified increases, with some of the measures drawing criticism from investors and rating agencies. The legislation did not specify the policy area the new deputy governor would oversee. Former debt agency chief Zoltan Kurali was made a deputy governor in charge of monetary policy and reserve management last month, while Deputy Governor Barnabas Virag, who led the bank's communications under Matolcsy, is due to stay on until June 2026. In March, Hungarian police began to investigate the central bank's educational foundation, launched under Matolcsy, on suspicion of misuse of public funds after a State Audit Office report found serious shortcomings. In response, Matolcsy said in March that the suggestions of fraud were wrong. The legislation would prohibit the central bank from establishing foundations after the law takes effect.
Reuters
21-02-2025
- Business
- Reuters
Hungary ruling party to tap former rate-setter Mager as central banker -sources
BUDAPEST, Feb 21 (Reuters) - Hungarian Prime Minister Viktor Orban's ruling Fidesz party will nominate former rate-setter Andrea Mager to succeed outgoing policy maker Gyula Pleschinger from next month, three sources familiar with the plan told Reuters on Friday. Parliament's Economic Affairs Committee is scheduled to hold a confirmation hearing for a member of the National Bank of Hungary's (NBH) rate-setting Monetary Council on Monday based on the agenda of the upcoming parliamentary session. The bank is widely expected to leave its base rate steady at the European Union's joint-highest 6.5% level next week, the last meeting chaired by outgoing Governor Gyorgy Matolcsy, after a surge in inflation at the start of the year. Orban, in power since 2010, nominated then Finance Minister Mihaly Varga in November as Hungary's next central bank governor, turning to an ally as he seeks to shore up the economy after two years of near-stagnation. "The policy outlook in Hungary remains clouded by more uncertainty than usual," Goldman Sachs economists said. "Governor Gyorgy Matolcsy will step down from the (NBH) board in March – this upcoming MPC meeting will be his last – with former finance minister Mihaly Varga taking his place, increasing uncertainty around the Bank's reaction function." The nine-strong Monetary Council, which has faced strong pressure from Orban's cabinet to lower interest rates, is headed for a shake-up, with the mandates of Pleschinger and two deputy governors also expiring between March and October. Investors are closely watching the transition amid lingering market concerns that an Orban-aligned majority of rate-setters could reduce borrowing costs ahead of a 2026 national election amid a weaker-than-expected economic recovery. However, Pleschinger has warned that a surge in inflation at the start of the year meant there was no scope for rate cuts this year, while economists polled by Reuters this week sharply pared bets on rate easing by the end of 2025. Mager, who currently leads Hungary's state-owned gambling organiser, was a rate-setter between 2011 and 2016, when the bank initially raised interest rates to 7%, then gradually lowered them to 0.9% amid substantially lower inflation. Over her previous term, Mager attended 63 policy meetings, voting to increase interest rates twice, lowering rates 32 times and backing steady rates 29 times based on voting records on the central bank's website. She has also filled other key roles under Orban, including minister in charge of state assets and government commissioner for postal and national financial services.
