KBC: Hungary abandons the project of financial transaction tax. No consensus on FX interventions in the CNB

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KBC: Hungary abandons the project of financial transaction tax. No consensus on FX interventions in the CNB

05.10.2012 11:36 Friday
Hungary should abandon its plan to impose a financial transaction tax on transactions conducted by the central bank. Lower budget revenues should be at least partly offset by the tax on state treasury transactions and cash withdrawals from banks.

Finance minister Gyorgy Matolscsy also expects extra revenues from improved tax collections and higher social security contributions by the rich. Overall, we consider this a step forward to the deal with the IMF as the MNB transaction tax was a key obstacle in talks with both IMF and EU. If the global sentiment remains positive, we may see EUR/HUF testing this year´s lows at 274.50.

In the Czech Republic, the CNB minutes revealed that Kamil Jancek, a well known hawk, voted for a rate cut. Pavel Rezabek, a swing voter, joined Eva Zamrazilova this time and voted for interest rate stability. Sadly, there is not much new information on the discussion about alternative ways to ease monetary policy in the document. The minutes repeat that FX interventions against the Czech koruna are the preferable way, but restate that there is no consensus on the need for such measures now. Lack of details and missing consensus could help the koruna to regain part of the lost battleground in the upcoming sessions, provided the global sentiment remains positive.

KBC

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