MNB raises 1-week depo rate by 20 bp to 3.3%

Banking

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The National Bank of Hungary (MNB) announced a rate of 3.3% for its one-week deposit facility ahead of a tender on Thursday, 120 bp over the base rate, according to a report by state news wire MTI.

The central bank raised the one-week depo rate by 20 bp from the tender a week earlier.

The one-week depo rate has moved in tandem with the base rate since late June, but the central bank's Monetary Council said at a monthly policy meeting in November that MNB "must be ready to set the interest rate on the one-week deposit above the base rate", allowing it to respond to a recent increase in short-term risks in financial and commodity markets "quickly and flexibly".

MNB deputy-governor Barnabás Virág said in an interview published earlier in the week that policy makers' decisions to raise the one-week depo rate over the base rate would become a "lasting element" of the central bank's tightening cycle. He added that the top of the interest rate corridor - 4.1% at present - is the "upper limit" for the one-week depo rate.

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