The head of the central bank has made it clear that he is watching the work of Christine Lagarde, the current president of the European Central Bank (ECB), with great sympathy, because she gave excellent advice to Hungary in 2011 as the French Minister of Economy and Finance.
Giorgi Matulcsi then addressed the fact that the last quarter century contained many surprises, with economic crises. He stated that initially, the euro was a great promise for the continent and a real danger for Washington.
When the euro was introduced, Americans were right to believe that this currency would challenge the dollar.
Therefore, the biggest achievement of the European Central Bank and the eurozone in recent decades is that it has survived. Then the central bank governor talked about when the euro will be introduced in Hungary.
The central bank’s position is clear
Magyar Nemzeti Bank has a clear and firm position that is understandable to everyone: we must introduce the euro, which will be a double decision, a joint decision of the Hungarian government and the European Commission – said hirado.hu a report According to György Matolcsy, who believes this is possible by 2030.
It would be irresponsible to introduce it before then, because we have seen, for example, that Slovakia entered the Eurozone somewhat unprepared but with great determination, and backtracked considerably.
Then the head of the Central Bank also said that if Hungary reaches nearly 90 percent of the average level of development in the European Union, it will be ready to introduce the euro.
He stated that the Greeks entered the eurozone unprepared – immediately after the eleven founding countries – as they lost the twelfth, and as is well known. “Until then, it is useful to make good use of the special leeway of the Hungarian Central Bank, which we have used well, for example during the difficult and very dangerous period of the Covid crisis,” the central bank governor stressed.
He then stated, “We have saved more than 11,000 billion HUF for the Hungarian economy, which means an additional 10 percent economic growth.” According to him, this can not be done as a member of the eurozone. “Bank Magyar Nemziti was able to do this because it targeted programs such as the bond programme,” he added.
successes of the European Union
According to György Matolcsy, Europe is in a better position now than it was after the 2008-2009 crisis, and this promising development path should not be discounted. Therefore, according to him, the country should strive with all its might to include it in all economic programs of the European Union.
According to the head of the Central Bank, the union will be successful in this decade, although there are still few indications of this.
Finally, he expresses his former criticism of the government: in the past three years, budgetary discipline has been lost in Hungary, which, in his opinion, must be corrected immediately so that the national economy does not fall into stagnation.
Monetary policy is tight, but lax
As is known, two decisions were made at the last interest rate meeting: the upper edge of the interest rate corridor was cut by 100 basis points, and the central bank’s one-day deposit rate was again revised by 100 basis points. Refers to 17 percent, and at that time, unusually, not Vice-President Barnabas Virag, but Gyorgy Matulci, a Hungarian national, the head of the bank (MNB) explained the background to the decision at Tuesday’s press conference. This is where government gets cold and hot.
György Matolcsy stated at the time that the Hungarians were already suffering from hyperinflation. The Monetary Council believes that the government, including the budget, is on the path of unification. In the budget, the previous unsustainable deficit decreased by 2.1% in 2021 and 6.2% in 2022 gradually.
According to the central bank governor, the external and internal environment has improved in addition to the strict monetary policy measures, not only in the possibility of achieving harmony between the government and the central bank. He stressed several times: “We will continue to pursue a strict and consistent monetary policy.”
According to the governor, lowering the base rate cannot be on the table for long.
Giorgi Matulcsi also reminded us that in 2019 it was indicated that there would be high inflation in the next decade, and an explosion in energy prices was also expected. “We indicated that this decade is heading towards stagflation,” he stressed. He said that one of the root causes of the rise in inflation is the 2021 budget, since the highest deficit was formed here compared to the region, and it only continued.
So the deterioration of public finances is a specific and unfortunate Hungarian cause
– His serious criticism of the government was formulated by the head of the Central Bank. Next, he also touched on the fact that inflation occurs mainly in food and fuel, so according to him, there is a specific galactic cause here as well.
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