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HUNGARY: Government Extends Interest Rate Freeze on Retail Loans

HUNGARY
CEEMEAEM BulletBulletEmerging Market NewsHungary

EURHUF made a brief test of the 415.00 handle as headlines from Cabinet Minister Gergely Gulyas’ press briefing crossed the wires.

  • The minister said the interest rate freeze on retail loans has been extended by another 6 months – initially due to expire at the end of the year. He also urged banks to expand access to the voluntary 5% cap on mortgage loans. On HUF weakness, Gulyas said the vast majority of the instruments required for stabilising the exchange rate are in the hands of the NBH, so the government does not plan to intervene.
  • The measures are part of the government's plans to boost growth, spearheaded by Minister Marton Nagy, but similar policies have been criticised by the central bank in the past over concerns of interference with its monetary policy.
  • Note that Nagy is expected to take the helm of a newly formed government office responsible for public finances when the Economy Ministry and Finance Ministry merge next year. Under such an arrangement, Finance Minister Varga would be appointed as Governor of the central bank.
  • In a report published in late October, Fitch Ratings said it is unclear if the government’s proposals under its new economic action plan will strengthen growth prospects sufficiently to reduce challenges to medium-term fiscal consolidation.
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EURHUF made a brief test of the 415.00 handle as headlines from Cabinet Minister Gergely Gulyas’ press briefing crossed the wires.

  • The minister said the interest rate freeze on retail loans has been extended by another 6 months – initially due to expire at the end of the year. He also urged banks to expand access to the voluntary 5% cap on mortgage loans. On HUF weakness, Gulyas said the vast majority of the instruments required for stabilising the exchange rate are in the hands of the NBH, so the government does not plan to intervene.
  • The measures are part of the government's plans to boost growth, spearheaded by Minister Marton Nagy, but similar policies have been criticised by the central bank in the past over concerns of interference with its monetary policy.
  • Note that Nagy is expected to take the helm of a newly formed government office responsible for public finances when the Economy Ministry and Finance Ministry merge next year. Under such an arrangement, Finance Minister Varga would be appointed as Governor of the central bank.
  • In a report published in late October, Fitch Ratings said it is unclear if the government’s proposals under its new economic action plan will strengthen growth prospects sufficiently to reduce challenges to medium-term fiscal consolidation.