Vice Governor Nagy spoke again this morning

HUNGARY - In Brief 05 Feb 2018 by Istvan Racz
The MNB's second most important policy-making figure, Vice Governor Márton Nagy spoke again this morning, this time in the form of an interview given to the economic daily Világgazdaság. In this he said the following:- The MNB remains committed to reducing long-term HUF yields in relation to similar yields in the Euro Area and in other CEE economies, but it is not following any specific target in term of absolute yield levels;- To this end, the Bank intends to continue its regular MIRS auctions, according to the new fixed-minimum-rate rules, a preset schedule and pre-announced quarterly sales targets. The stability of the market is an important objective; - The MNB have bought so far HUF74bn in mortgage bonds, thereby reducing MB yields below the yields on government bonds of similar maturities;- The Bank is going to continue purchases of MBs, but only through the stock exchange, not through the interbank market;- The MNB does not think the economy is overheated or even close to that state - the current level of the base rate may be held even through end-2020, and current BUBOR levels may hold out until end-2019.We have the following comments on this:1. Improving the RELATIVE position of HUF yields as an MNB objective appears to us as a refining of previous statements on the same subject. Formerly, the MNB appeared to have spoken of the reduction of long-term yields, and the same speaker often used the term 'ramming long-term yields into the ground' still earlier but not longer than a year ago. The new definition of the MNB's objective looks like adjusting policy to current global market realities.2. We have seen the MNB raising their intended MIRS quantities at both a...

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