NBH governor Jarai: MC made bad decision to hold rates on Nov 20. The Monetary Council (MC) made bad decision on Nov 20, when it voted to hold rates at 8%, central bank governor Zsigmond Jarai said. He confirmed earlier media information that seven of the 13-member Council voted for unchanged rates, while 5 were for a 25bps hike. We note that the absent MC member is broadly perceived as “hawk”, which means that technically the vote was 7-to-6. According to Jarai, potential hike would have had much better impact as it would have signalled NBH’s commitment to defend its inflation target. Still, the governor maintained his earlier stance that further monetary tightening was not excluded if there was “danger for the inflation target”. Jarai openly spoke about stagflation, saying that NBH’s goal now should be to prevent the combination of economic slowdown and accelerating inflation. We recall that the November Inflation report of the NBH projected headline CPI rise at 4.1% y/y in 2008, which is the horizon of central bank’s monetary policy. On the other hand the inflation target is set at 3%+/-1pp.