Hungary’s central bank eyes more unconventional monetary policy tools

By bne IntelliNews November 4, 2015

Hungary’s central bank plans to use more unconventional tools to further ease monetary conditions to support the slowing economy, Deputy Governor Marton Nagy said on November 4.

The statement comes just a day after the Magyar Nemzeti Bank (MNB) unveiled new measures aimed at kickstarting market-based lending. The central bank wants to phase out its cheap loan programme, which has been the main driver of credit to the economy over the past few years, but has been forced to extend it into next year due to weak lending growth from commercial banks.

Alongside a sharp drop in incoming EU funds, a lack of credit has helped undermine economic growth this year. Hungary is forecast to see growth ease to 3.2% in 2015, from 3.6% last year.

The Magyar Nemzeti Bank (MNB) will not cut its main policy interest rate further because the impact will be limited, Nagy said. The MNB ended its latest easing cycle in July, leaving the benchmark at a new low of 1.35%. It has since pledged to keep the rate at the current level, at least until the second half of 2017.

“MNB will shift its focus from the benchmark rate to non-conventional tools, as the latter are much more efficient and can be better targeted”, Nagy said.

The MNB’s non-standard measures will aim at boosting lending to small and medium-sized firms (SMEs) and bringing down yields on government debt, he said. The central bank would like to see an even flatter yield curve. In its view, the yields on long maturities are high, but yields on shorter instruments should also be pushed lower, the official said, according to Portfolio.hu.

The move towards unconventional monetary policy tools has already been signalled in recent months. The MNB's switch to a new main policy tool on September 23 was seen as a "quasi rate cut" by analysts. 

Related Articles

Chinese fund to buy Hungarian telco Invitel

Central European private equity group Mid Europa Partners has agreed to sell Hungarian broadband and telephone provider Invitel to China CEE Investment Co-operation Fund. The deal values ... more

OTP’s Croatian subsidiary to buy Splitska Banka

The Croatian subsidiary of Hungary’s OTP Bank has signed an agreement to buy Splitska Banka, owned by the French Société Générale Group, OTP announced on December 21. Hungary’s largest ... more

Japan’s Asahi buys a huge round in Central Europe

Asahi has beaten a host of regional heavyweights in the race to buy SABMiller’s Central and Eastern European beer brands, the Japanese brewer announced on December 13. The Asian giant said it ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss