May 22, 2014 / 11:43 AM / 3 years ago

Hungary c.bank governor says not worried about deflation risk

LONDON, May 22 (Reuters) - Hungary's central bank governor said on Thursday he was not worried about a deflation risk to the Hungarian economy, and that April's fall in prices was a one-off.

He also said that a couple of foreign banks had indicated they may withdraw from Hungary and that clearing out bad loans from the banking system may bring in new buyers.

"I am not worried about deflation risk in the case of the Hungarian economy but I am extremely worried about the danger of deflation regarding the EU, especially the euro zone," Gyorgy Matolcsy told reporters following a speech in London.

Hungarian prices fell in April for the first time since 1968, with inflation running at -0.1 percent.

"A couple of major foreign-owned banks have sent out signals they may leave the country," Matolcsy said.

He added that the central bank's programme to help banks clear bad loan portfolios "might result in promising new buyers". (Reporting by Carolyn Cohn and Sujata Rap)

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