Hungary central bank action ‘distorting’ swaps curve

The Central Bank of Hungary has offered up 1 trillion forint notional of cheap interest rate swaps, driving down bids for receiver swaps and government bond yields, say dealers

hungary central bank headquarters
The central bank is keen to encourage lending to SMEs to boost the economy

An ambitious stimulus package from the Central Bank of Hungary – which is offering local banks up to 1 trillion Hungarian forint ($3.6 billion) in cheap interest rate swaps in a bid to boost lending – is having a sizeable distortive effect on the forint interest rate swap curve, say dealers.

The central bank introduced its monetary policy initiative – dubbed the 'interest rate swap conditional on lending activity' (LIRS) programme – at the end of January, offering commercial banks three-year

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