MNB weekly QE purchases steady at HUF 60 bln

MNB

MNB headquarters in Budapest.

The National Bank of Hungary (MNB) bought HUF 60 billion of securities in the framework of a quantitative easing program in the week ended April 25, practically level with the amount in the previous week, state news wire MTI reports, citing data published by the central bank.

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 ten 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. Weekly purchases have been around HUF 60 bln nearly every week since.

The latest weekly QE data show the central bank bought HUF 26 bln of securities at auction and HUF 34 bln outside of auction. The bonds included HUF 49 bln of securities with terms under 10 years. No purchases of non-government securities with state guarantees were made during the week.

The total purchases made in the framework of the QE program reached nearly HUF 1.972 trillion on April 25, including almost HUF 1.919 tln of government securities and HUF 53.3 bln of bonds from other issuers with government guarantees, such as the Hungarian Development Bank (MFB) and Magyar Eximbank.

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's Monetary Council will meet for a monthly policy meeting on Tuesday.

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

On March 9, the central bank's 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 programme and the effectiveness of government securities purchases", MNB said.

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