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The impact of the easing cycle on the Hungarian macroeconomy and financial markets

Author

Listed:
  • Dániel Felcser
  • Gábor Dániel Soós
  • Balázs Váradi

    (Magyar Nemzeti Bank)

Abstract

This paper examines the easing cycle initiated by the Magyar Nemzeti Bank in August 2012 and its macroeconomic and financial market impacts. It first presents the operation of the transmission mechanism under normal economic conditions and then addresses the main challenges of the post-crisis period. It gives an overview of the impact of the interest rate cycle on various financial markets and the macroeconomy. The paper concludes that based on the estimates provided by the Magyar Nemzeti Bank’s forecasting model, the easing cycle has decreased the rate of the undershooting of the central bank inflation target and significantly contributed to increasing the level of economic output.

Suggested Citation

  • Dániel Felcser & Gábor Dániel Soós & Balázs Váradi, 2015. "The impact of the easing cycle on the Hungarian macroeconomy and financial markets," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(3), pages 39-59.
    • Handle: RePEc:mnb:finrev:v:14:y:2015:i:3:p:39-59
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    File URL: http://english.hitelintezetiszemle.hu/letoltes/2-felcser-soos-varadi-en.pdf
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    References listed on IDEAS

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    1. Orsolya Csortos & Zoltan Szalai, 2015. "Difficulties in them management of the global financial crisis: academic and economic policy lessons," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(3), pages 5-38.
    2. von Borstel, Julia & Eickmeier, Sandra & Krippner, Leo, 2016. "The interest rate pass-through in the euro area during the sovereign debt crisis," Journal of International Money and Finance, Elsevier, vol. 68(C), pages 386-402.
    3. Zsuzsa Kékesi & Balázs Kóczián & Balázs Sisak, 2015. "The role of household portfolio restructuring in financing of the general government," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(1), pages 79-110.
    4. Oxana Babecka Kucharcukova & Michal Franta & Dana Hajkova & Petr Kral & Ivana Kubicova & Anca Podpiera & Branislav Saxa, 2013. "What We Know About Monetary Policy Transmission in the Czech Republic: Collection of Empirical Results," Research and Policy Notes 2013/01, Czech National Bank.
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    Cited by:

    1. Péter Gábriel & György Molnár & Judit Várhegyi, 2016. "Fixing an impaired monetary transmission mechanism: the Hungarian experience," BIS Papers chapters, in: Bank for International Settlements (ed.), Inflation mechanisms, expectations and monetary policy, volume 89, pages 179-191, Bank for International Settlements.

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    More about this item

    Keywords

    easing cycle; monetary policy transmission;

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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