MNB shifts top of interest rate corridor downward by 50 bps

MNB

MNB headquarters in Budapest (Image by Jessica Fejos)

The National Bank of Hungary today said its policy makers decided to shift the top of the overnight interest rate corridor – a symmetric band around the base rate that prevents extreme fluctuations of interbank rates – downward by 50 bps, Hungarian news agency MTI reported.

The MNBʼs Monetary Council decided at a meeting today to lower the top of the corridor, that is, the rate for O/N collateralized loans, from 75 bps to 25 bps over the base rate. The bottom of the corridor, or the O/N rate for central bank deposits, will remain at 125 bps under the base rate. Calculating with the central bankʼs key rate – 1.20% for the three-month deposit – the O/N collateralized loan rate stands at 1.45% and the O/N central bank deposit rate at -0.05%. 

The interest rate conditions will take effect from March 23, the MNB said.

The decision came about two weeks after the European Central Bank cut its main interest rate by 5 bps to 0%.

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