Rate-setters say maintaining 'favorable financing environment' key to recovery

MNB

Image by Jessica Fejos

Members of the Monetary Council of the National Bank of Hungary (MNB) agreed that maintaining a favorable financing environment and providing funding for corporate investments is key to the economic recovery at a monthly policy meeting in December, according to a report by state news wire MTI.

Minutes from the meeting on December 15, published on Wednesday, show policymakers were of the view that the central bank must "maintain a favorable financing environment" and "provide the amount of funding necessary for the continuous operation of companies and the realization of their investment projects" to support the economic recovery.

Council members agreed that the MNB's Bond Funding for Growth Scheme (BGS) and Funding for Growth Scheme (FGS) provide "adequate funding" for investment projects.

The restoration of sustainable economic growth requires a recovery of both demand and supply sides of the economy, the council said, adding that private and public investment projects are "equally important" to jump-start the economy.

"Funding that is widely available must be ensured to companies in order to maintain the positive trends in investment," the council said.

The council said the expansion of the central bank's balance sheet and the provision of some HUF 5.8 trillion in liquidity had "successfully supported the mitigation of the negative economic effects of the pandemic", adding that they were "ready to support the restoration of sustainable economic growth by further expanding the central bank balance sheet".

"Monetary Council members attached importance to maintaining a lasting presence in the government securities market and to continuing the programs supporting investment," they added.

The council voted unanimously at the December meeting to keep the central bank base rate unchanged at 0.60%.

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