Economy 7 April 2020, 10:38am

Hungary c.bank chief Matolcsy and deputies to hold press conference

Portfolio

The National Bank of Hungary (MNB) is to hold an online press briefing in the afternoon, with attendance of Governor György Matolcsy and MNB Deputy Governors. They are to announce measures adopted by the Monetary Council today. This is the event Prime Minister Viktor Orbán heralded on Saturday.

The MPC is holding a non-rate-setting meeting today, and Governor György Matolcsy, and Deputy Governors Csaba Kandrács, Márton Nagy and Mihály Patai will hold a joint press conference at 2 P.M. today.

Prime Minister Viktor Orbán and Gergely Gulyás, minister leading the Prime Minister's Office, have both noted over the eekend that the MNB will support economic stimulus measures aimed at mitigating the impacts of the coronacrisis (COVID-19) pandemic with further measures.

It is unclear what steps the central bank has in the pipeline, but two weeks ago the MNB suggested it could possibly re-launch its mortgage note purchase programme, and this is what might be announced today.

Previously, the cabinet decided on a loan repayment moratorium until end-2020 on a recommendation by the MNB. The MPC has also recently taken steps to manage the coronavirus crisis, primarily by ensuring liquidity on the financial market. A fortnight ago, it introduced a new collatarised loan facility (repo) by which it provides banks loans up to five years at a fixed 0.9% interest rate (the base rate), hoping that most of the resources will be used to buy government securities.

Subsequently, the central bank implicitly hiked rates last week when the forint weakened to all-time lows against the euro close to 370. It said it would regularly announce 1-week deposit tenders every week. The instrument helps to manage the banking system's liquidity more efficiently by tying up the liquidity of the banking system at policy interest rate of 0.9%. With that move the O/N deposit facility (-0.05%) has essentially lost its importance.

in other words, the mnb is providing short-term liquidity for the financial sector while also supporting banks via long-term loans, both at a rate of 0.9%.