Matolcsy's nomination to head cbank no surprise, say analysts
Economy Minister Gyorgy Matolcsy is the nominee for central bank governor to replace Andras Simor, Prime Minister Viktor Orban told public radio Kossuth on Friday. Mihaly Varga, the government's point man at negotiations with the IMF, will replace him at the helm of the economy ministry.
Orban appointed a third deputy governor to the central bank on Friday.
He said stability and predictability will result from appointing a person with government experiences to the central bank, he added.
Analysts told MTI on Friday that the nomination of Economy Minister Gyorgy Matolcsy to central bank governor was no surprise and they expect further rate cuts which will sooner or later have a negative effect on the forint rate.
Zoltan Arokszallasi, an analyst for Erste Bank, said uncertainty would remain and the forint would weaken until Matolcsy makes it clear what changes he plans to implement in monetary policy. The base rate, which is considered the main instrument of monetary policy, could further drop to 4.75 percent, he added.
MKB Bank senior analyst Zsolt Kondrat said Matolcsy's appointment might cause uncertainty, as a result of his past actions as minister, his communication style and statements concerning the central bank and monetary policy.
The instrument most likely to boost lending will be the introduction of a low-interest refinancing loan but it will probably not have a very strong effect, considering that even "English central bank's similar programme is hobbly," Kondrat said.