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Parliament Redrafts Central Bank Law As Monetary Council Cuts Base Rate To Record Low

By Tamás Székely // 2016.04.26.

Hungary’s Parliament has approved a controversial law amendment that once again enables companies and foundations owned by the Hungarian Central Bank (MNB) to close their books to public scrutiny. However, according to the new legislation, MNB must disclose data if publicity will not endanger its companies’ position on the market. Under the new law, the financial activity of Central Bank’ companies and foundations are supervised by the State Audit Office.

The new law amendment came after the Constitutional Court ruled that the previous amendments to the law governing the central bank were unconstitutional. President János Áder sent the laws to the court for review in March, because they would have given MNB the legal power to decline public information requests concerning companies that support its activities, or to classify such information with retroactive effect. The re-drafted amendment was passed by the Parliament on Tuesday with 112 lawmakers in favour and 61 against.

Meanwhile the Hungarian Central Bank has cut its base rate by 15 basis points to a new low of 1.05 percent, as it tries to bolster economic growth and revive inflation. This was the second consecutive 15bp reduction after the Monetary Council launched a new rate cut cycle last month. The rate decision was in line with analyst forecasts, as MNB already signalled it will cut rates again. MNB’s Monetary Council said today in a statement that “the sustainable achievement of the inflation target points to a further slight reduction in the policy rate.”

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