BUDAPEST Feb 6 Hungarian interest rates have
fallen to a point where Hungarian debt may become unattractive
to investors, Economy Minister Mihaly Varga said on Thursday,
signalling that a steady monetary easing campaign could be
nearing its end.
But Varga also told the public television channel M1 that it
was up to the National Bank of Hungary's Monetary Council to
decide on interest rates.
The bank, run by Prime Minister Viktor Orban's close ally
Gyorgy Matolcsy, has cut interest rates from 7 percent in 2012
to a record low of 2.85 percent to help an economic
recovery, and has flagged further possible easing.
After the unbroken series of rate cuts, investors are
pondering whether the bank may halt its easing campaign after
capital withdrawals in the past two weeks caused a rout on
emerging markets around the world, also hitting the forint.
Varga restated his view that that the forint's volatility
was largely due to international factors, and said Hungary was
not comparable to Turkey as Hungary had a large current account
surplus and strong fundamentals.
"But of course it's a fact that the rate cutting cycle is
getting close to a point where investors are already starting to
wonder whether it's worth lending or not - let's leave it up to
the Monetary Council how they decide," Varga said.
Asked if he believed investors were trying to push the bank
into a rate hike, he said: "Right now, I think international
impacts are much more important in this story than speculation
against the Hungarian base rate."
In the minutes of last month's rate-setting meeting,
published on Wednesday, the Monetary Council said uncertainty
over the global financial environment warranted a cautious
approach to monetary policy, but there could be room for more
easing. The bank next meets on Feb 18.
(Reporting by Gergely Szakacs; Editing by Kevin Liffey)