Hungary decreases central bank base rate to 1½% from 1.65%

By Toni Weeks

San Luis Obispo, Calif., June 23 – The Monetary Council of Hungary’s Magyar Nemzeti bank voted to reduce the central bank base rate by 15 basis points to 1½% from 1.65% at its meeting on Tuesday. This follows last month’s rate decrease to 1.65% from 1.8% and April’s reduction to 1.8% from 1.95%. The change is effective as of June 24.

Based on the council’s decision, the new interest rates are as follows:

• Two-week MNB deposit at 1½%;

• Overnight central bank deposit, equal to two-week MNB deposit rate minus 100 bps, for a rate of ½%; and

• Overnight collateralized loan, or the interest rate on the two-week MNB deposit plus 100 bps, for a rate of 2½%.

In addition, the interest rate remunerated on required reserves is 1½%, and the penalty interest rate applied in case of reserve deficit is 1½%.

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