Central Bank of Hungary adopts green monetary policy

The Central Bank of Hungary (MNB) has adopted a monetary policy strategy that allows it to support green finance as part of its mandate to achieve price stability.

“The MNB – within the framework set by the act and without compromising the achievement of its other objectives – aims to support sustainable economic transformation,” the central bank said as it published its green policy toolkit earlier in July.

The policy will see the central bank take a more active role in promoting green lending in the mortgage market. The MNB launched a green mortgage bond purchase programme, up to an initial value of 200 billion forints ($654 million). The central bank said it aims to build a “liquid and transparent” green mortgage bond market.

As a further step, the central bank is offering 200 billion forints of interest-free lending, provided banks lend this onward at low interest rates to support the building of energy-efficient homes.

In its statement, the central bank said the housing market was one of the “top priorities” for environmental sustainability. It said banks were not doing enough to account for green factors when making mortgage-pricing decisions.

At its policy decision on July 27, the MNB raised its policy rate by 30 basis points. The central bank said inflation – at 5.3% in June – was likely to decline in the coming months but to remain above the 3% target.