Rate-setter: Lower commodities prices, bigger bond purchases by banks support low interest environment
Photo by Jessica Fejos
The fall in global commodities prices as well as measures the National Bank of Hungary (MNB) has taken to draw lendersʼ liquidity into government securities, support a low central bank base rate for an extended period of time, MNB deputy governor Marton Nagy told Hungarian news agency MTI.
Nagy said the fall in global market prices was seen across a broad range of commodities, not only oil. This has created an extraordinarily favorable cost environment for the Hungarian economy that could put downward pressure on inflation projections not just for the short term but for the monetary policy horizon as well, he added.
Nagy called earlier conditions on Hungaryʼs government securities market "abnormal", when lendersʼ liquidity flowed into the central bankʼs two-week bills. The MNBʼs move to cut off direct access to the sterilization instrument by non-residents and extend its maturity to three months, thus channeling banksʼ extra cash into government securities, is returning the market to "normal", he added.
The MNBʼs rate-setters said after a policy meeting in August that loose monetary conditions could remain in place for "an extended period" on the condition that "the assumptions underlying the bankʼs projections hold".
ADVERTISEMENT
Mapei Targets 6% Higher Revenue This Year
Parliament Negates Mandatory Membership in MOK
Richter Board Proposes HUF 390/Share Dividend
Veronika Spanarova Wins Expat CEO of the Year Award 2023
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
