(Bloomberg) -- Hungary’s economy minister renewed calls on the central bank to provide stimulus and decried what he described as its too narrow-minded focus on inflation.
The latest salvo in a feud between Minister Marton Nagy and central bank Governor Gyorgy Matolcsy comes as the government is struggling to kickstart growth after a recession. The long-standing conflict has periodically hit the forint as policymakers have come under pressure to cut rates.
Central bankers are acting like “cyclops,” with an eye set only on inflation, Nagy said in comments made to Index news website and confirmed by his staff. “Inflation is around 4% now. In such an environment, reinvigorating growth can be started.”
The central bank has repeatedly said it is mandated by law to focus on price stability. Governor Matolcsy’s term ends next year, giving Prime Minister Viktor Orban an opportunity to pick someone more loyal.
With economic growth expected at about 2% this year, the central bank should return to its earlier initiatives such as the Funding for Growth program to subsidize lending, Nagy said. The government will add its own fiscal plans to help families and smaller companies, he added.
The central bank has said it sees one or two more rate cuts in 2024 as realistic after more than a year of easing, while repeatedly warning that caution is warranted.
--With assistance from Veronika Gulyas.
©2024 Bloomberg L.P.
