Commentary

Reviewing the track record of Hungary's central bank governor

György Matolcsy, Governor of the Hungarian Central Bank is nearing the end of his six-year term but he is also the only candidate for the next term. Magyar Nemzet columnist Tamás Nánási reviews his track record.

When he took over the helm of the Hungarian National Bank (MNB) as governor in March 2013, Matolcsy heralded a U-turn in the bank's policies, bringing them back to the service of the nation. The hearing for his next term will soon go through Parliament, but it is worth taking a look at his track record beforehand.

At the time of his appointment, opponents predicted that Matolcsy - who in his previous job as economics minister refused the International Monetary Fund's tutelage over Hungary - would most certainly lead the monetary policy towards disaster. Not so. Instead, it turned out that mould-breaking policies diverging from the traditional can be just as effective.

At the time, the new leadership of MNB implemented a radical change in policies and instead of going against the government it chose cooperation and continues to do so in its decisions. They are not doing so out of servitude towards the government or by giving up the bank's independence, but by serving the best interests of the country's citizens and the nation as a whole.

Previously, the MNB had a policy carved in stone, following a strict line of keeping inflation under 3 percent. Matolcsy made a slight change to this, aiming for a two to four percent bracket, which it managed to maintain. SInce January 2017 inflation has remained within these confines, ensuring price stability.

Elsewhere, it was Matolcsy's success that managed to free Hungary from the EU's excessive budget deficit procedure and led a consistent policy of decreasing the base rate. This and the bank's various economic initiatives to support local businesses added six percent to GDP growth under his leadership.

To summarize: the past six years of the MNB has been a series of uninterrupted successes and we have no reason to expect anything else in the coming six years. 

Title image: Prime Minister Viktor Orbán and Central Bank Governor György Matolcsy (MTI)

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