Hungary should not delay ERM-2 entry if market finds euro roadmap credible - c.bank
Hungary should not delay joining the euro's waiting room, ERM-2, if markets view its euro adoption roadmap as credible, central bank Deputy Governor Zoltan Kurali said. He added that fiscal slippage and volatility during ERM-2 membership could push accession beyond 2033.
Credible roadmap could justify entering the euro waiting room without delay Free-floating forint makes Hungary unlike recent adopters Market will set equilibrium exchange rate for euro entry Fiscal slippage, volatility in ERM-2 could push accession beyond 2033 (Adds more comments, detail) By Gergely Szakacs BUDAPEST, Oct 6 (Reuters) — Hungary should not delay joining the Exchange Rate Mechanism (ERM-2), the euro's waiting room, if markets view the government's euro adoption roadmap as credible, central bank Deputy Governor Zoltan Kurali said on Tuesday.
Kurali, who oversees monetary policy, told Reuters last month that a pledge by Prime Minister Peter Magyar's government to meet the terms of euro entry by 2030 implied Hungary could join ERM-2 in early 2029 "at the latest". 5%. "If the steps and measures towards euro entry outlined in the 2027 budget and the medium-term fiscal plan are appropriate and credible, and the market accepts them, there is no reason to delay the launch of ERM-2 entry," Kurali said. hu.
"We need to aim for an exchange rate level which ensures that our inflation target is met consistently without harming the competitiveness of the economy," Kurali said. 5% from 3% as part of preparations for joining the euro. No Comparable Example Among Recent Euro Joiners Kurali said the central bank would need to pay close attention to exchange-rate stability on the path to euro adoption because none of the most recent euro zone entrants operated a free-floating currency regime.
"There is no comparable example to ours from the euro accession experience of the recent past, so we will have to pay attention to this, primarily at the central bank, not to think that this will be smooth," he said. He said keeping Croatia's currency stable under a managed float had been less challenging because of the market's smaller size, while Bulgaria's currency board limited large swings in the foreign exchange market. Kurali repeated his baseline expectation that Hungary could join the euro on January 1, 2032 at the earliest, provided all conditions are met.
But risks including fiscal slippage and exchange-rate turbulence during ERM-2 membership could push back accession beyond 2033, according to a presentation shown during his remarks. (Reporting by Gergely Szakacs. com; )