Copyright Page
© 2023 International Monetary Fund
SIP/2023/005
IMF Selected Issues Paper
European Department
Hungarian Monetary Policy Operations Before, During, and After the Pandemic, Hungary Prepared by Tonny Lybek*
Authorized for distribution by Jean-François Dauphin
January 2023
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed on January 17, 2023. This paper is also published separately as IMF Country Report No 2023/071.
ABSTRACT: Within its inflation-targeting framework, the Magyar Nemzeti Bank (MNB) has frequently adjusted its monetary operations. This has raised questions about their internal consistency, appropriateness, and effectiveness. A broader assessment, implying a comparison to a counterfactual, is outside the scope of this paper. Our prior is agnostic. We find that the changes were generally well-motivated within the MNB statutory powers; prioritized, transparently explained, and monitored; and promptly adjusted, when they no longer served their purpose. Occasionally, some tools have worked at cross purposes. Government policies have at times hampered monetary policy. Simplicity comes with a premium, as complexity can blur signals.
RECOMMENDED CITATION: Lybek, Tonny. 2023. Hungarian Monetary Policy Before, During, and After the Pandemic. IMF Selected Issues Paper (SIP/2023/005). Washington, D.C.: International Monetary Fund.
| JEL Classification Numbers: | E52, E58, |
| Keywords: | Hungarian monetary operations, unconventional monetary instruments |
| Author's E-Mail Address: | tlybek@imf.org, tonnylybek@gmail.com |
| JEL Classification Numbers: | E52, E58, |
| Keywords: | Hungarian monetary operations, unconventional monetary instruments |
| Author's E-Mail Address: | tlybek@imf.org, tonnylybek@gmail.com |
Front Page
SELECTED ISSUES PAPERS
Hungarian Monetary Policy Before, During, and After the Pandemic
HUNGARY
Title Page
HUNGARY
SELECTED ISSUES
January 17, 2023
Approved By
European Department
Prepared By Tonny Lybek.
Contents
MONETARY OPERATIONS IN HUNGARY BEFORE, DURING, AND AFTER THE PANDEMIC
A. Main Phases of Hungarian Monetary Operations Since 2013
B. Competing Goals, Targets, and Instruments
C. Hungarian Monetary Operations Since 2013
D. The Ever-Challenging Transmission Mechanism
E. Conclusion and Takeaways
FIGURES
1. Inflation and Monetary Policy Stance
2. Policy and Money Market Rates
3. The MNB's Liquidity Absorbing and Providing Operations, 2013–2022
4. Size of MNB Balance Sheet, Dec. 2012–Dec. 2022
5. Outstanding Loans of Funding for Growth Schemes, Jan. 2013–Dec. 2022
6. Government Bonds Development During Self-Financing Program
7. MNB Asset Purchase Programs
8. Correlation Coefficients of Change of 3-Month BUBOR, Real Growth and Inflation
9. Main Conventional Transmission Channels
TABLE
1. Overview of Selected Monetary Instruments Since 2013
References