BUDAPEST (Reuters) - The National Bank of Hungary expects to keep monetary conditions loose for the foreseeable future, with the base rate remaining steady until the end of 2020, Deputy Governor Marton Nagy told the daily Vilaggazdasag in an interview published on Monday.
Central Europe’s most dovish central bank will also seek to ensure that longer-dated yield premiums remain at their current low level compared with regional and euro zone yields to give the economy and lending a further boost.
The bank left the base rate at a record-low 0.9 percent at its January meeting, saying it expected to meet its 3 percent inflation target in a sustainable way only by the middle of next year.
Nagy also said the central bank had bought 74 billion forints ($298 million) worth of mortgage bonds from domestic banks under the latest iteration of its monetary easing campaign, which also includes new interest rate swaps to curb yields on longer-dated bonds.
“Now, that developed market yields are rising quickly, the market presence of the (central bank) is an important stabilising force,” Nagy was quoted as saying. “We can slow down the rise of domestic yields, thus, spreads can remain low.”
Nagy said no further changes were planned to the bank’s monetary policy interest rate swap (IRS) facility after last month’s tweak, which made the facility fixed-rate instead of variable-rate NBHO.
Reporting by Gergely Szakacs; Editing by Toby Chopra