Central bank governor: Monetary policy has contributed HUF 1,000bn to growth

Budapest, December 11 (MTI) – The National Bank of Hungary’s (NBH) monetary policy turnaround has contributed 1 trillion forints (EUR 3.1bn) to economic growth in recent years, central bank governor Gyorgy Matolcsy said in an interview with daily Magyar Idok, published on Friday.

“If everything goes to plan, one third to one quarter of total GDP growth will still be supported directly or indirectly by central bank programmes in 2017-2018,” Matolcsy said.

Dynamic growth of around 2.5 percent a year is still attainable from 2016, he said, adding that supporting this will be the central bank’s key aim, in accordance with meeting the 3 percent medium term inflation target.

The NBH governor noted that the central bank’s rate-cutting cycle and self-financing programme have greatly contributed to lowering government securities yields. As a result, the general government budget has saved 550 billion forints in interest expenditures by the end of 2015, he said. In 2015 alone, these savings could come to 300 billion, or 1 percent of GDP, he added.

Matolcsy said the NBH intends to carry on with its incentives to boost lending to both companies and households.

He noted that a comprehensive development plan will be implemented at the Budapest Stock Exchange. The aim is to make the bourse a genuine financing alternative for domestic companies, he added.

Answering a question concerning the forint exchange rate, Matolcsy reiterated that the bank had no exchange rate target. “Regarding the forint, we watch only one thing, and this is stability — that is price stability and financial stability,” he said.

The governor dismissed speculation that the Government Debt Management Agency (AKK) would be integrated into NBH stressing that there is not even a possibility for this.

Source: http://mtva.hu/hu/hungary-matters