MNB buys HUF 60 bln of securities


Photo by Jessica Fejos

The National Bank of Hungary (MNB) bought HUF 60 billion of securities in the framework of a quantitative easing program in the week ended March 14, level with the volume in the previous week, data published on the central bank's website show.

MNB's Monetary Council said after a monthly policy meeting on January 26 that they would maintain their policy stance but reallocate liquidity from the MNB's collateralized lending facility to its QE program, stepping up purchase volume and standing ready to expand purchases to securities under 10 years. The central bank started buying terms under ten years in the last week of January, and raised its weekly purchase volume to HUF 60 bln in the first week of February from a weekly HUF 50 bln-55 bln in the period since October.

The latest weekly QE data show the central bank bought HUF 29 bln of securities at auction and HUF 31 bln outside of auction. The bonds included HUF 34 bln of terms under 10 years.

MNB made no purchases of non-government securities with state guarantees, such as those issued by Magyar Eximbank or the Hungarian Development Bank (MFB), during the week.

The total purchases made in the framework of the QE program reached nearly HUF 1.607 trillion on March 14, including almost HUF 1.559 tln of government securities and HUF 48.3 bln of bonds from other issuers with government guarantees.

MNB rate-setters performed a "technical revision" on the QE program at their November policy meeting and said the next technical revision would be performed when the stock reaches HUF 2 tln.

The bank launched the QE program in the spring of 2020 "to prevent monetary policy transmission and manage economic and financial risks arising from the coronavirus pandemic".

On March 9, 2021, MNB policymakers decided to remove a limit on the volume of securities series the central bank may purchase in the framework of the QE program.

The measure is "expected to enhance the flexibility of the program and the effectiveness of government securities purchases", the central bank said.

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