A bit of clarification on the ongoing conflict between the government and the MNB may be useful

HUNGARY - In Brief 11 Mar 2024 by Istvan Racz
This morning (March 11), the MNB has made an announcement on its website, claiming that Bloomberg had communicated false news and wrong conclusions about the MNB and the relationship between PM Orbán and governor Matolcsy. The MNB stressed that the Prime Minister and the Governor continue to be in an orderly working relationship, regularly consulting on policy issues. Previously, on March 7, the MNB made another statement, summarising in 11 points the ways how the government have interfered with central bank independence, by taking measures that adversely affected the MNB's policy freedom in its area of responsibility. Still earlier, on February 29, governor Matolcsy used unusually sharp language on economy minister Nagy, claiming that the latter was personally set against him and also that the government was planning a further attack against MNB independence through an intended amendment of the Central Bank Act, formally proposed by the Finance Ministry. As this issue appears as a negative factor in investors' eyes, and as it is likely to remain so for longer term, some clarification from us may be useful at this point. First, the MNB's summary of past government interference with MNB independence and of government measures that adversely affected the Bank's freedom of making decisions is essentially correct. The Bank mentioned in their list measures like the administrative limits on deposit interest rates, the prohibition of the repricing of flexible-rate customer loans, price caps set on fuels and basic food items, restrictions on the purchase of MNB discount bonds, administrative restrictions on domestic investment funds' portfolio structure, 'voluntary' interest r...

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