Insight

A rupture with Governor Matolcsy triggered Marton Nagy’s ousting from the National Bank

Disagreements with Governor Matolcsy over policy led to the dismissal of Marton Nagy as Deputy Governor of the National Bank of Hungary (NBH). Nagy’s appointment as advisor to PM Orban is likely a bridge to a more meaningful position.

Nagy’s relationship with Matolcsy – as well as others at NBH – had long been fraught with tension. He forged a good personal relationship with Finance Minister Mihaly Varga, whose relationship with Matolcsy is strained, further offending Matolcsy when exhibiting ambition to take over the Governor’s position once his mandate expired. Their personal relationship became untenable when in March Nagy secured the support of Minister Varga and PM Orban to increase the reference rate, a humiliating defeat for Matolcsy who responded by sacking Nagy and reversing the rate hike later in June. 

Nagy’s immediate appointment as special advisor to PM Orban is an unusual step, signalling a slight depreciacion of Matolcsy’s stock. This position, however, does not give Nagy any real clout over policy, instead serving as a bridge to a more meaningful role, possibly after the 2022 general election.