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Matolcsy at Hungary Central Bank Would Be Negative, BofA Says

Jan. 4 (Bloomberg) -- The nomination of Hungarian Economy Minister Gyorgy Matolcsy as central bank chief would be “highly negative” and would weaken market confidence and the forint, Bank of America Merrill Lynch said.

It would also mean Hungary’s benchmark interest rate wouldn’t fall below 5 percent, Mai Doan, a London-based economist at Bank of America, wrote yesterday in a research note. The central bank has cut the rate to 5.75 percent from 7 percent since August.

“A ‘weak’ governor sets the floor for the policy rate at 5 percent, despite the severe weakness in the economy,” Doan wrote.

Matolcsy is the leading contender to replace Magyar Nemzeti Bank President Andras Simor, whose six-year mandate ends March 3, according to local media including news website Index and weekly Heti Valasz. Matolcsy is already building a team in anticipation of being appointed, Index reported Jan. 2.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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