BUDAPEST, March 24 (Reuters) - Hungary’s central bank decided on new measures to boost liquidity on Tuesday and said inflation would drop below its 3% target in the coming months due to the economic fallout from the coronavirus pandemic.
The Monetary Council, after leaving interest rates on hold earlier on Tuesday, decided to introduce a new fixed-rate collateralised loan instrument. Lending will be provided at a fixed interest rate by the National Bank of Hungary with unlimited liquidity.
In NBH also released domestic counterparty credit institutions from the reserve requirement with immediate effect.
“To address the challenges posed by the pandemic, it is key to ensure the required level of liquidity. In order to preserve effective monetary policy transmission, the Monetary Council is ready to take further measures to provide additional liquidity,” the rate-setting Monetary Council said in a statement.
Reporting by Krisztina Than