April 23, 2020 / 5:10 AM / a month ago

UPDATE 1-Hungary cbank plans to start bond purchases in first week of May -Governor

(Adds more comments from cbank Governor, background)

BUDAPEST, April 23 (Reuters) - Hungary’s central bank is ready to take further steps to mitigate the economic impact of the coronavirus crisis and plans to launch its bond-buying programme early next month, Governor Gyorgy Matolcsy told the Figyelo weekly on Thursday.

Matolcsy said restarting exports and investments will be key to a successful economic recovery.

He said the National Bank of Hungary’s Monetary Council will decide at its April 28 meeting about the conditions of new programmes to buy government bonds and mortgage notes.

“We are examining how could banks and non-banking players both be partners in the two asset-purchasing programmes,” he said.

Matolcsy said the NBH’s relatively low balance sheet, at around 25% of GDP in 2019, would allow it to launch quantitative easing following the examples of major global central banks.

He also said if needed, the central bank was ready to take further measures to offset the economic fallout from the coronavirus pandemic.

“With an appropriate strategy to restart the economy we can trust in a V-shaped recovery,” Matolcsy said.

The central bank has already announced a massive lending programme for companies, and has launched a series of liquidity boosting measures for banks over the past weeks.

The central bank still sees the economy growing this year, while the Finance Ministry projects a 3% recession. Some analysts say the prospects are even bleaker and forecast a deeper recession than after the 2008 global crisis, when the economy shrank by close to 7%. (Reporting by Krisztina Than; Editing by Raju Gopalakrishnan)

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