Hungary central bank keeps base rate on hold at 0.60 pc

Hungarian central bank (NBH) rate-setters on Tuesday kept the base rate on hold at 0.60 percent and also decided to maintain the interest rate corridor.

In a statement released after the meeting, the central bank’s Monetary Council said it would stick to its current policy stance but reallocate liquidity from its collateralised lending facility to its quantitative easing programme, stepping up purchase volume and standing ready to expand purchases to securities under ten years.

“In order to use its instruments affecting longer maturities more effectively, the [NBH] will reallocate liquidity provided under its individual programmes from the collateralised lending facility towards government securities purchases while keeping its monetary policy stance unchanged. In addition, it will be ready to extend its government securities purchases to include government securities with maturities of less than ten years, thereby ensuring continuous liquidity in the government securities market over the middle segment of the yield curve,” the council said.

“The [NBH] will continue to apply a flexible approach to the amount of its weekly government securities purchases, increasing its direct purchases in the secondary market relative to the past,” they added.

The council reiterated that the NBH will use the QE programme “to the extent and for the time necessary”, “maintaining a lasting presence in the market”.