The decision to nominate Economy Minister Gyorgy Matolcsy to become Hungary’s new central bank governor is another blow to the Bank’s independence and is likely to result in further interest rate cuts and possibly unconventional policies to boost lending. However, the heavy burden of FX debt throughout the economy blunts the effectiveness of monetary loosening. In fact, by appointing a party loyalist as governor and undermining the central bank’s credibility, looser policy could actually make things worse if it causes a sharp fall in the forint.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services