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Gov't Extends Deposit Rate Cap Till End-June

Banking

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Hungary's government has decided to extend a cap on interest rates on deposits of financial companies and some private individuals at the three-month discount T-bill rate until June 30, the Economic Development Ministry said on Wednesday, according to a report by state news wire MTI.

The measure, which applies to bank deposits by investment companies, funds, home savings banks, insurance companies, investment funds, and private individuals with HUF 20 million or more on their accounts, was introduced on November 22 and was set to expire at the end of March. 

The ministry noted that some institutional investors had "taken advantage of the situation" and put their money in deposits paying interest as high as the 18% paid on the central bank's O/N deposits at quick tenders.

The three-month discount T-bill benchmark rate stood at 14.83% on Wednesday.

The ministry said the government also decided to prohibit the unrestricted transfer of central bank discount bills.

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