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Will he, won’t he… get it?

That was the question on Magyar political analysts’ lips on Monday – he being Viktor Orban, Hungary’s go-go, rapid-fire prime minister, “it” being the two-thirds parliamentary vote he most definitely covets for a “super-majority” again during his second term in office.

He’s on the brink – it depends on a few thousand votes cast outside the country or in other districts. But regardless of this, the one time anti-communist student firebrand is sure to be at the helm in Budapest for four more years, and still with a commanding parliamentary majority. Continue reading »

Has the Great Magyar Rate-Cutting Cycle come to an end? To many, it looks that way, following the central bank’s decision on Tuesday to snip just 10 basis points off the base rate, to leave it at 2.6 per cent a year.

And even this trim, the smallest made so far in a 20 month long trimming spree, is possibly more symbolic, an effort to keep up the momentum in front of elections, scheduled on April 6, just 12 days hence. Continue reading »

By Ferenc Gyurcsány, former prime minister of Hungary

There is a Hungarian folk tale about a fair, where a trader fools a man into buying a blind horse. The new owner mounts his steed, only for it to gallop straight into a wall. The horse trader stretches wide his arms and explains that the horse isn’t blind, but brave.

Faithful followers of Viktor Orbán, the Hungarian prime minister, similarly apologise on behalf of their leader when confronted with government policies that have led to multitudes of conflicts – conflicts which typically baffle outsiders. Continue reading »

Viktor Orban, Hungary’s populist prime minister, has promised a continuation of the policies enacted in the past four years if his Fidesz party wins the country’s general elections, set for April 6.

Orban – who is well ahead in opinion polls against a left-liberal coalition cobbled together at the eleventh hour – told the Hungarian chamber of commerce on Wednesday “we’ll [just] continue,” before spelling out a 10 point economic programme that includes pledges to increase the proportion of domestically held government debt, accelerate industrialisation, boost Hungarian ownership in the banking and agricultural sectors and further decrease energy costs to support Hungarian competitiveness. Continue reading »

Inflation watching in Hungary is getting tiring on the eyes: following an unprecedented zero change in prices in January, annual inflation crept up by a whole 0.1 per cent in February, according to figures released on Tuesday.

The figures reinforce the belief that the central bank will continue with its marathon rate-cutting cycle with at least one more cut later this month. Continue reading »

By Tamás Pesuth, Head of Economic Research, Nézőpont Institute

“Hungary is a small country, but it looms larger on investors’ screens.” So the Financial Times wrote at the beginning of February this year, while calling the governor of the National Bank of Hungary (MNB) “a maverick.”

As György Matolcsy marked his first year in office today, a more rounded appraisal of his work is required. The FT article looked mainly at the forint exchange rate and the low base rate in reaching its “maverick” judgement. Continue reading »

Nothing like a foreign policy crisis to concentrate the mind.

Poland’s potential adoption of the euro, which had been pushed off to the end of the decade under political, economic and constitutional difficulties and lacklustre public support, has been given a jolt of energy by Russia’s creeping invasion of Crimea. Continue reading »

Predicting what the Hungarian central bank is going to do is becoming something of a fools game. Last month, the bank cut rates for the 18th time in a row. So far, so predictable – except the bank changed from 20 basis point cuts (as it had used five times previously) to 15bp.

On Tuesday, the bank cut again – a 19th consecutive cut – but confounded most analysts who had predicted that the weakened currency would give the MPC reason to reduce by a smaller margin. No chance – the bank stuck to its new 15bp reduction, dropping rates from 2.85 per cent to 2.7 per cent. Where will it end? Continue reading »

Only last week, Nomura’s Peter Attard Montalto warned that Hungary’s central bank “appears to be playing with fire” in its insistence that “Hungary is different” and that – with inflation at all time lows – it can continue its rate cutting policy regardless of the bigger world out there.

Montalto published that on Thursday, when the forint had recovered from the worst of the buffeting it received earlier in the week, to trade in a range around Ft308 to the euro. Continue reading »

By Kim Lane Scheppele of Princeton University

Hungary was once the precocious child of post-communist transition, garnering praise for its political and legal institutions. But ever since the Fidesz government of prime minister Viktor Orban came to power in 2010 with a two-thirds parliamentary majority, Hungary has been on a legislative rampage, unsettling the legal order and causing “regulatory uncertainty” through “abundant and unstable new regulation,” as the OECD delicately put it. Continue reading »

Central Europe’s leading economies have strapped on afterburners, with new manufacturing PMI data released Monday showing a strong recovery in Poland, the Czech Republic and Hungary.

In Poland, the region’s largest economy, the improvement in business conditions was the strongest in three years. The headline PMI number, in which anything above 50 marks an economic expansion, came in at 55.4 for January, up from 53.2 in December. Continue reading »

The markets just aren’t reading the script, it seems. On Thursday the Hungarian economy ministry issued its latest upbeat economic release: “The number of people in work exceeds 4m” – that’s 235,000 more in work than when the Fidesz government took over in 2010, it announced in triumph. Minister Mihaly Varga was equally upbeat in a guest post on beyondbrics this week.

So if Hungary is in such good shape, how come the forint has been so badly hit? Continue reading »

By Attila Mesterhazy of the Hungarian Socialist Party

At the WEF in Davos, the renowned economist Kenneth Rogoff had encouraging words for Europe’s leaders: he argued that high levels of education, strong innovative capabilities and the rule of law provide the old continent with a solid, long-term basis for development.

In Hungary, unfortunately, it is these very values and traditions which Prime Minister Viktor Orban has most undermined in his disastrous rule of the past three and a half years. Continue reading »

Forint hits 2-year low to the dollar

That’s the forint over the last three years to the euro. On Friday, it came under renewed pressure as seveal other emerging market currencies stabilised after a week of turmoil. Continue reading »

The Hungarian forint set off on a roller coaster ride on Wednesday, buoyed at first by optimism and then buffeted by a sell-off across emerging market currencies, exacerbated by dovish signals from policy makers at home. The forint fell to as much as Ft310 to the euro, its weakest level in more than a year and a drop of 2.1 per cent from Tuesday’s close of Ft303.6. Continue reading »