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Statement on the Monetary Council's decision of 16 January 2003


In the past two days, Magyar Nemzeti Bank has been faced with unfounded speculative attacks against the intervention band of the forint. The Monetary Council hereby expresses its commitment to maintaining the exchange rate band and, therefore, it has made the following decision:

1 With effect from 17 January 2003, the Monetary Council has reduced the central bank base rate by 100 basis points from 7.50% to 6.50%

2 With effect from 17 January 2003, the Council has widened the overnight interest rate corridor around the two-week central bank deposit rate to ±3 percentage points. Accordingly, from 17 January 2003 the upper and lower boundaries of the interest rate corridor will be as follows:

- The interest rate on the overnight collateralised loan facility will be equal to the central bank base rate plus 3 percentage points

- The interest rate on the overnight central bank deposit facility will be equal to the central bank base rate minus 3 percentage points

3 The MNB has decided to suspend the intermittent availability of the two-week deposit facility. In addition, from 21 January 2003 the Bank will accept two-week deposits exclusively under the terms of fixed-rate deposit tenders, with quantity limits, as specified in the Terms and Conditions of the MNB's Operations in the Forint and Foreign Exchange Markets.

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