The building of the NBH in Budapest – Photo: wikimedia

Central bank leaves base rate on hold

Hungarian rate-setters left the base rate on hold at 13 percent at a regular policy meeting on Tuesday.

The Council also decided on Tuesday to keep the central bank’s O/N deposit rate at 12.50 percent and the O/N collateralised loan rate at 25 percent.

The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”. The base rate is paid on mandatory reserves.

The rate-setters had signalled an end to the tightening cycle at their monthly policy meeting in September, but said tight monetary conditions would be maintained with a focus on sterilising liquidity and improving monetary policy transmission.

On October 14, the policymakers announced a decision to launch O/N deposit tenders on a daily basis. The central bank has since offered the liquidity sterilisation instrument at a rate of 18 percent.

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