By Gergely Szakacs
BUDAPEST (Reuters) – Hungarian Prime Minister Viktor Orban’s ruling Fidesz party will nominate former rate-setter Andrea Mager to succeed outgoing policy maker Gyula Pleschinger from next month, three sources familiar with the plan told Reuters on Friday.
Parliament’s Economic Affairs Committee is scheduled to hold a confirmation hearing for a member of the National Bank of Hungary’s (NBH) rate-setting Monetary Council on Monday based on the agenda of the upcoming parliamentary session.
The bank is widely expected to leave its base rate steady at the European Union’s joint-highest 6.5% level next week, the last meeting chaired by outgoing Governor Gyorgy Matolcsy, after a surge in inflation at the start of the year.
Orban, in power since 2010, nominated then Finance Minister Mihaly Varga in November as Hungary’s next central bank governor, turning to an ally as he seeks to shore up the economy after two years of near-stagnation.
“The policy outlook in Hungary remains clouded by more uncertainty than usual,” Goldman Sachs economists said.
“Governor Gyorgy Matolcsy will step down from the (NBH) board in March – this upcoming MPC meeting will be his last – with former finance minister Mihaly Varga taking his place, increasing uncertainty around the Bank’s reaction function.”
The nine-strong Monetary Council, which has faced strong pressure from Orban’s cabinet to lower interest rates, is headed for a shake-up, with the mandates of Pleschinger and two deputy governors also expiring between March and October.
Investors are closely watching the transition amid lingering market concerns that an Orban-aligned majority of rate-setters could reduce borrowing costs ahead of a 2026 national election amid a weaker-than-expected economic recovery.
However, Pleschinger has warned that a surge in inflation at the start of the year meant there was no scope for rate cuts this year, while economists polled by Reuters this week sharply pared bets on rate easing by the end of 2025.
Mager, who currently leads Hungary’s state-owned gambling organiser, was a rate-setter between 2011 and 2016, when the bank initially raised interest rates to 7%, then gradually lowered them to 0.9% amid substantially lower inflation.
Over her previous term, Mager attended 63 policy meetings, voting to increase interest rates twice, lowering rates 32 times and backing steady rates 29 times based on voting records on the central bank’s website.
She has also filled other key roles under Orban, including minister in charge of state assets and government commissioner for postal and national financial services.
(Reporting by Gergely Szakacs; Editing by Alistair Bell)
