May 14, 2009, 17:08 CET
Central banker warns big interest rate cut would cause forint crash
A big cut in Hungarian interest rates would lead to a currency crisis, deputy chair of the central bank Julia Kiraly said at a conference on Thursday.
The Monetary Council of the central bank voted unanimously on April 20 to keep rates on hold at 9.50 percent.
Kiraly said that Hungary's risk premium was well above that of Poland or the Czech Republic and even that of Romania and Bulgaria. This has an impact on Hungary's interest rate level, she said.
She added, however, that Hungary's government securities market had stabilised. None of the long-term government securities have yields above 10 percent, while in October last year it was impossible to sell them even at yields above 10 percent, Kiraly added.
The European Central Bank told the National Bank of Hungary on Wednesday that it would not accept Hungarian securities to offset loan refinancing, she said.
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