MNB makes HUF 11.4 bln of QE purchases in week without auction

MNB

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The National Bank of Hungary (MNB) bought close to HUF 11.4 billion of securities in the framework of a quantitative easing program in the week ended December 27, all outside of auction, data released by the central bank show, according to a report by state news wire MTI.

MNB said earlier that no weekly QE auctions would take place during the weeks starting December 21 and 28, as tender and auction schedules are temporarily adjusted to "market characteristics" at the end of the year, but it added that it could buy securities outside auction during the period.

Purchases at weekly auctions have been around HUF 40 bln recently.

The fresh data show MNB bought HUF 10 bln of government bonds outside of auction, including HUF 5 bln of 2031/A bonds, HUF 2.5 bln of 2033/A bonds, HUF 2 bln of 2038/A bonds and HUF 0.5 bln of 2041/A bonds. It also bought close to HUF 1.4 bln of a Magyar Eximbank bond maturing in 2027.

A week earlier, the MNB's weekly QE purchases were close to HUF 55 bln, including HUF 20.2 bln outside of auction.

The central bank started buying securities outside of auction for the first time in months in mid-October, after central bank policymakers decided to take a "flexible approach" to the scale of the securities purchased in the framework of the QE program. The MNB's Monetary Council also decided to raise the threshold for purchases of certain series of government securities from 33% to 50% and to expand the range of assets available for purchase to government-guaranteed debt securities, such as those issued by Magyar Eximbank and the Hungarian Development Bank (MFB).

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 trillion.

The total purchases made in the framework of the QE program reached HUF 1.032 tln on December 27, including HUF 983.7 bln of government securities and HUF 48.3 bln of bonds from other issuers with government guarantees.

MNB launched the QE program in the spring "to prevent damage...to monetary policy transmission and manage economic and financial risks arising from the coronavirus pandemic".

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