Optional Reserves Rate to Be Level With Base Rate From Oct 1

MNB

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The Monetary Council of the National Bank of Hungary (MNB) decided on Tuesday that the rate the central bank pays on reserves over the mandatory threshold will be level with the base rate from October 1, according to a report by state news wire MTI.

The decision was taken at a monthly non-rate-setting meeting while weighing ways to streamline the monetary policy toolkit.

Deputy governor Barnabás Virág had said the central bank's toolkit would be streamlined after the council's monthly rate-setting meeting in August. Tools that "are no longer necessary" will be removed, while those that effectively support financial market stability, such as swaps and discount bills, will remain, he said.

The council also decided at the meeting on August 29 to reduce the interest rate paid on optional reserves by 100bp to 14.00pc from August 30. The policymakers left the base rate on hold at 13%, but said a 100 bp reduction in the rate the central bank pays on one-day quick deposits offered at daily tenders was warranted.

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