Understanding Credit Markets: Hungary

Take a look at some of the measures announced by Hungarian Prime Minister Viktor Urban (*):

. Orban has been reducing the power of independent institutions and asserting his influence since winning elections in 2010, ignoring objections from the U.S. and the United Nations.

. Lawmakers in Orban’s Fidesz party last week approved a central bank law that expands the rate-setting Monetary Council while curbing the power of central bank President Andras Simor. The International Monetary Fund and the EU broke off talks on a bailout last month over the plan.

. Ruling-party lawmakers ousted the chief justice of the Supreme Court, narrowed the jurisdiction of the Constitutional Court, replaced an independent Fiscal Council with one dominated by the premier’s allies, created a media regulator led by ruling-party appointees and chose a party member to lead the State Audit Office.

. One judge, Tunde Hando, the wife of Jozsef Szajer, a European Parliament member from Orban’s Fidesz party, will be responsible for naming all new judges, including replacing scores who were forced into retirement last year.

[QUESTION: WHAT WAS THE REACTION IN THE CREDIT MARKET? WHAT HAPPENED TO INTEREST RATES? THE ANSWER IS HERE].

(*) Edith Balazs and Zoltan Simon: "Hungary’s New Constitution Triggers First Joint Opposition Demonstration", Bloomberg.
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