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NBH Governor Says Orban Has Launched "Significant Attack" on CenBank Independence

HUNGARY

Prime Minister Viktor Orban’s government has launched a “significant attack” against the central bank's independence and autonomy with a planned modification of the law governing the institution, Governor Gyorgy Matolcsy said.

  • Yesterday, the NBH welcomed an ECB opinion that Hungary must protect central bank independece, stating:
    • "Recently, the Ministry of Finance initiated the amendment of the Hungarian Central Bank Act in order to - among other things - amend the scope of duties of the MNB Board of Directors and extend the powers of the MNB Supervisory Board."
    • "As the ECB's opinion draws attention to, even based on the proposed new supervisory powers of the MNB's Supervisory Board, it cannot be authorized to monitor the MNB's activities that would directly or indirectly affect the basic tasks of the MNB and those related to the European System of Central Banks."
  • Nevertheless, ING noted this morning that the ECB’s statement did not include any clear objection to the legal changes but promoted central-bank independence and unambiguous wording to avoid the potential expansion of supervisory board controls.
  • EURHUF spiked higher on those comments, erasing its earlier losses and narrowing the gap to the early August/late September highs of 394.67/394.65. A break here would place the cross at a near 1-year high.
  • Virag’s following comments stating that Hungary must maintain an ‘appropriate’ positive real rate has seemed to ease topside momentum in EURHUF, however, with the cross back below the 384.00 handle at typing.

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