June 5, 2020 / 10:31 AM / a month ago

UPDATE 1-Hungarian central banker Virag nominated for deputy governor

(Adding detail, context, analysts)

By Krisztina Than

BUDAPEST, June 5 (Reuters) - Barnabas Virag, the Hungarian central bank’s managing director in charge of monetary policy and economic analysis, has been nominated to be a deputy governor at the bank, the prime minister’s spokesman told national news agency MTI on Friday.

Virag will replace Marton Nagy, who unexpectedly resigned last week. Nagy was seen as the man who crafted many of the National Bank of Hungary’s complex and unconventional policy measures over the last five years.

The nomination of Virag, who joined the NBH in 2003, will ensure policy continuity at the bank, which has supported Prime Minister Viktor Orban’s pro-growth agenda with low interest rates and unconventional measures, analysts said.

Peter Virovacz, an economist at ING in Budapest, said Virag was much less outspoken than Nagy had been.

“This nomination indicates that we can’t expect any significant change in monetary policy,” he said, adding that it remained to be seen how policy areas will be divided up between the bank’s three deputy governors.

The bank is led by Governor Gyorgy Matolcsy, a strong ally of Orban who holds the power to nominate the top brass at the central bank, including its deputy governors.

Nagy was the most vocal central banker, openly expressing his views to journalists and banks alike. After his departure, Deputy Governor Mihaly Patai was put in charge of the bank’s lending programmes, while Virag temporarily took charge of monetary policy issues.

Parliament’s economic committee will hold a hearing for a nominee for the deputy governorship next Tuesday. The president then officially appoints the deputy governor.

“The policy of low interest rates, with a slightly weakening forint in order to help exports and the economy, and relatively flexible inflation targeting – this is what we may see in monetary policy going ahead,” said David Nemeth, at KH Bank. (Reporting by Krisztina Than; Editing by Kevin Liffey and Hugh Lawson)

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