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Central bank keeps base rate on hold, narrows corridor

MNB

Image by Jessica Fejos

The Monetary Council (MC) of the National Bank of Hungary (MNB) left its base rate on hold at 0.90% at a policy meeting today, in line with expectations, while it also narrowed the interest rate corridor, a band around the base rate that prevents extreme fluctuations of interbank rates, according to Hungarian news agency MTI.

The O/N collateralized loan rate, the top of the range, was lowered from 1.05% to 0.90%, while the O/N central bank deposit rate remained unchanged at -0.05%. The interest rate for the one-week collateralized loan was lowered from 1.00% to 0.90%, according to MTI.

The MC signaled an end to an easing cycle at a policy meeting in May and has since stood by its position on keeping the base rate on hold, MTI added. At the same time, the council has made a number of unconventional monetary policy moves such as limiting the amount and frequency of the MNBʼs three-month deposits, the central bankʼs main sterilization instrument, as well as cutting banksʼ reserve requirement ratio.

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