Insight

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

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Hungary , monetary policy , National Bank of Hungary

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

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Hungarian forint exchange rate set to remain low

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currency , exchange rate , Hungary , monetary policy

The coronavirus crisis has pushed the forint to levels over Ft350:€1. This corresponds to the government’s preferences, and the central bank will do just enough to keep it from falling any further. The early effects of the coronavirus pandemic in Hungary drove the country’s currency to a record low, Ft370:€1, on 18 March. The National Bank of Hungary (NBH, the central bank) responded by hiking the one-week lending rate to 1.85%, from 0.9% previously. It left its 0.9% policy rate unchanged, however. This has so far succeeded in keeping the forint at levels between Ft350 and Ft360 to the euro.

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