Hungarian national bank governor attacks Hungarian government in unprecedented way – UPDATED

György Matolcsy, Governor of the National Bank of Hungary (NBH), has sent a tough message to the Hungarian government.

On Thursday, the BSE Legek 2023 event was held, where György Matolcsy, President of the Magyar Nemzeti Bank, was the first speaker.

According to the Governor, Hungary needs an economic policy environment that not only demands but also enables success. According to György Matolcsy’s assessment, the government has made a major economic policy turnaround from mid-2021, and has broken up with the economic policy of the 2010s, portfolio.hu writes.

“Inflation eats growth, inflation is fuelled by fiscal deficits, and public debt is fuelled by economic policy and fiscal deficits. The macroeconomic situation of a country cannot be significantly different from its productivity level and competitiveness level,” Matolcsy said.

Plan of the Hungarian government an “attack” on independent central bank

According to the central bank governor, there is a need to shift from a consumption-oriented to an investment-oriented economic policy. “Government decisions are a covert, veiled attack on the independence of the central bank. What the government is now planning to do with the central bank law would be a major attack on the independence of the central bank,” the NBH Governor said.

Matolcsy said it was painful that a former colleague was leading the attacks against them. He said the series of attacks against them for 30 months was wrong. He suggested that the innovations of the decade should be introduced in Hungary, including the proposals of the Austrian Federal Chamber.

UPDATE: Finance Minister Varga: Government respects central bank’s independence

The government’s goal is to strengthen the National Bank of Hungary’s transparency and ensure its frugal operation while respecting the central bank’s independence, Finance Minister Mihály Varga said on Facebook on Thursday according to the MTI.

To achieve this, the Finance Ministry, in consultation with the European Central Bank, is considering extending the powers of the central bank’s supervisory board over activities external to the bank’s core tasks.

The proposal confirmed by the ECB would extend the supervisory board’s powers to cover other central bank activities, such as approving economic decisions above a certain value threshold as well as tightening the obligation to provide information and reports, Varga said.

Meanwhile, the prime minister also underlined the importance of the central bank’s independence, saying it was “sacred and inviolable”, according to a statement by the PM’s press chief.

The government has not yet discussed the amendment to the law regarding the powers of the bank’s supervisory board, the statement added.

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Source: MTI