MNB raises 1-week depo rate 30 bp to 4.3%

MNB

Image by Jessica Fejos

The National Bank of Hungary (MNB) raised the rate for its one-week deposit facility by 30 bp to 4.3% ahead of a tender on Thursday, according to a report by state news wire MTI.

MNB's Monetary Council had flagged an increase in the one-week deposit rate at a monthly policy meeting on Tuesday, after members decided to accelerate the central bank's tightening cycle and raise the base rate by 50 bp to 2.9%.

MNB deputy-governor Barnabas Virág said after the meeting that the NBH aims to change the one-week deposit rate once a month but stands ready to use the instrument "flexibly" and could modify it more frequently, if necessary.

The one-week deposit rate was left on hold for three weeks in a row ahead of the tender on Thursday.

Virág also said the base rate and the one-week deposit rate "could converge in the course of the first half of the year".

The one-week deposit rate now stands 140 bp over the 2.9% base rate.

The one-week depo rate moved in tandem with the base rate from June until November, when the MNB's Monetary Council decided the central bank must be allowed to be set it over the base rate to respond to an increase in short-term risks in financial and commodity markets "quickly and flexibly".

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