MNB rate-setters set final three-month depo cap at HUF 75 bln
Photo by Jessica Fejos
The Monetary Council of the National Bank of Hungary (MNB) reduced the limit on the stock of three-month deposits, the central bankʼs main sterilization instrument, to HUF 75 billion for the end of the fourth quarter at its policy meeting on Tuesday.
"In the Council’s assessment, the limitation on the stock of three-month deposits has fulfilled its role and the HUF 75 bln year-end upper limit on the stock will not be reduced further," the policy-makers said in a statement released after the meeting.
The MNB started placing quarterly caps on the three-month depo stock last autumn in an effort to force more liquidity onto the market. The measure is one of several "unconventional" policy moves to support monetary easing while keeping the base rate unchanged. The three-month depo stock will reach HUF 300 bln by the end of this month, following a gradual reduction from over HUF 1,600 bln when the caps were announced.
The central bank holds tenders for placements in the three-month deposits once a month.
The Council also decided to raise the stock of forint swaps against euros that the central bank introduced last autumn as a "fine-tuning instrument" for market liquidity. The stock and maturity structure of the swap instruments will have greater importance in future, the Council said, adding that the aim was to "provide the loosening effect up to the longest possible section of the yield curve as soon as possible."
The latest tender for the swaps, held on Monday, brought the total stock to HUF 900 bln, including HUF 75 bln of one-month, HUF 425 bln of three-month, HUF 250 bln of six-month and HUF 150 bln of twelve-month swaps.
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