Raiffeisen expects base rate to remain same

Analysis

The Monetary Council of the National Bank of Hungary (MNB) could ease monetary policy via further unconventional measures at its rate-setting meeting today, but the base rate is likely to remain on hold at 0.90%, according to an analysis by Raiffeisen Bank, Hungarian news agency MTI reported yesterday.

There is a "high probability" that the central bank will replace its three-month deposit with a six-month deposit, continuing a policy direction started when it introduced the three-month deposit in place of a two-week deposit, according to the analysis. Alternatively, MNB policy-makers could introduce a limit on liquidity placed in three-month deposits, the analysis added. 

The MNB said in July that it would reduce the frequency of tenders for its three-month deposits, its main sterilization instrument, and limit the amount of bids it accepts. A decision on the limit will be taken in September and will come into force on October 26, the MNB said at the time.

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