With a restrained grin, Mihaly Varga, Hungary’s economy minister, pressed the button to open trading at the Budapest Stock Exchange (BSE) on Friday – simultaneously inaugurating the Xetra trading system for the first time in the Hungarian capital. Continue reading »
As expected by the markets, Hungary’s central bank cut the base rate from 3.4 per cent to 3.2 per cent on Tuesday – the sixteenth consecutive monthly cut since the process began in August 2012.
The Hungarian forint depreciated slightly on the news, climbing a fraction to 298.48 to the euro in afternoon trading. Continue reading »
If Hungarian bankers – already facing another year of heavy losses – thought things could not get worse, they just have.
Only days after Karl Sevelda, chief executive of Raiffeisen Bank International, more than hinted he was prepared to withdraw from some central European countries, including Hungary, due to the unfavorable business climate, the competition office in Budapest on Wednesday announced fines on 11 commercial banks totaling Ft 9.5bn (€32m). Continue reading »
By Gordon Bajnai, former prime minister of Hungary
In a recent radio interview Viktor Orban, Hungary’s prime minister, made a surprising confession. While speculating about the nature of the Hungarian electorate, he stated: “Hope is more important to Hungarian voters than fact.”
As he runs for re-election soon, is this his moment of truth? Is the one-time liberal, anti-communist dissident admitting that he is hoping that voters will decide based on hopes, rather than facts? Because the facts – most especially the economic facts – of the past three and a half years are not on Orban’s side. Continue reading »
Hungary’s central bank once again cut the base rate on Tuesday – for the fifteenth consecutive month – trimming 20 basis points off the previous figure to bring the key rate down to another record low of 3.40 per cent.
That means Hungary has, slice by slice, capitalised on its improving inflation figures and the benign global climate to more than halve the base rate from August last year, when it stood at 7.00 per cent. Continue reading »
Vistors to downtown Budapest – teeming with tourists in these summer months – may be surprised by the number of forlorn shops, their fronts closed and shuttered, awaiting new tenants. Yet despite such evidence of a prolonged retail downturn, the Hungarian economy can still show the world a thing or two says Viktor Orban, the country’s pugnacious prime minister: not least that it has brought its budget deficit down below 3 per cent of GDP, and cut inflation to record lows.
Whether these achievements are sustainable is another matter. But government officials repeat the positive elements of the story, and the markets seem to believe it. Continue reading »
That'll cost you
Despite the Hungarian government trumpeting a turnaround in the economy of late and low budget deficit figures of the past two years, Mihaly Varga, the new pragmatic finance minister, seems to believe discretion is the better part of valour: with tax revenues looking somewhat anaemic this year, he announced a mini-package of tax increases on Monday to keep the deficit on track. Continue reading »
Hungary’s “fairytale economy” – as former economy minister György Matolcsy famously described it last year to CNN – remains, well, exactly that – fairytale. Despite the emphasis by government spin-doctors on lower bond yields and the strengthening forint, life for your average Imre and Ildikó just doesn’t seem to be getting any easier – as the latest figures for consumer spending show. Continue reading »
It’s getting rather routine: another rate setting meeting at the Hungarian central bank, another rate cut of 25 basis points down to another record low rate. On Tuesday this pattern took the rate down for the ninth consecutive month to 4.75 per cent.
About the only upset in this otherwise well-rehearsed show was was a mistakenly sent alert on Bloomberg terminals that the rate had been reduced to a mere 1 per cent. Cue a flurry sell off in the forint, before the damage could be repaired (see chart) – and business was back to normal, with the Hungarian currency trading at Ft 299.48 to the euro at 5pm Europe time. Continue reading »
Hungary is doing just fine for now, at least that’s the thrust of the news from the government’s PR office. Of late, it seems Viktor Orbán, the adrenalin-high prime minister, has been cutting ribbons for a living; a railway rolling stock builder expanding here (Stadler – a Swiss producer, in Szolnok, with €13.6m in further investment) – a children’s toy company there (Lego – the Danish plastic brick maker, in Nyíregyháza, with a whacking €200m investment job) were headline stories last week. Continue reading »
The devil being in the detail is a phrase with much resonance in Hungary – especially when, as on Thursday, things look rather too good.
“Inflation at record low” said the headlines. Indeed, annual consumer price inflation fell to 2.2 per cent in March, well below the consensus of 2.5 per cent and the lowest ever recorded since the transition to a market economy. Continue reading »
Julia Király, deputy-governor of the Hungarian central bank (pictured left), resigned on Monday saying that moves made by György Matolcsy, the newly appointed governor, were damaging both the bank’s hard-earned credibility and the national economy over the longer term.
Last week Matolcsy announced a new central bank funding scheme which aims to get cheaper lending to small businesses and also reduce their exposure to euro-denominated loans. Continue reading »
The Hungarian currency is a bit like the famed “Grand old Duke of York” of late – the Duke who according to the traditional nursery rhyme, marched his 10,000 men up the hill, then back down again, all to no avail.
The new “postmodern” monetary policy unveiled on Thursday was widely – and worriedly – anticipated, but there was something of a relief rally afterwards. Where we go from here? It’s anyone’s guess. Continue reading »
By Peter Attard Montalto of Nomura
The Hungarian central bank has on Thursday embarked on a risky strategy of postmodern policy in a bid to boost growth through lending via the provision of liquidity. It is labelled as a “Funding for Growth Scheme”.
So will it work? And longer term, what does it mean for the forint? Continue reading »
Hungary’s new central bank president Gyorgy Matolcsy has unveiled a new 250bn forint (€831m) lending plan which allows banks to borrow at zero per cent from the central bank.
The banks can then lend to businesses with the funds at a maximum 2 per cent rate of interest, a measure aimed at getting loans to small and medium-sized businesses to help them replace their foreign currency loans with forint loans. The forint initially depreciated on Thursday, to around 303.8 to the euro, before reversing to around 300.6 to the euro at 1pm CET, an appreciation of 0.6 per cent. Continue reading »