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NBH to Phase Out Use of Longer-Term Deposit Instrument

HUNGARY

The National Bank of Hungary will phase out the use of a longer-term deposit instrument, as per a statement on its website:

  • "From 31 January 2024, the Magyar Nemzeti Bank (MNB) will discontinue the use of its variable-rate, maximum 6-month deposit facility... the instrument supported the MNB’s monetary tightening by absorbing liquidity for long-term tenores."
  • "The Monetary Council decided to simplify the MNB’s toolkit in several steps to enhance the role of the central bank base rate and thereby improve the effectiveness of monetary policy transmission."
  • "Following the closure of the interest rate gap between the rates of policy instruments, the role of the long-term deposit facility in the monetary policy transmission has decreased."

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