Press release on the Monetary Council’s decision, effective from 8:45 a.m. On 14 October 2022

The Monetary Council reviewed economic and financial developments and decided to raise the upper bound of the interest rate corridor, leaving the base rate unchanged. Accordingly, the Monetary Council raised the overnight collateralised lending rate to 25 percent and suspended the one-week collateralised loan, with effect from 8:45 a.m. on 14 October.

In the current turbulent period in financial markets, a key task for the MNB is to ensure market stability, in addition to meeting its primary objective of price stability. The MNB stands ready to intervene using every instrument in its monetary policy toolkit to ensure these. The existing challenges warrant the use of targeted and temporary instruments.

To this end, from 14 October 2022, the MNB will announce one-day (T/N) foreign exchange swap instrument and overnight (O/N) deposit quick tenders on a daily basis at higher interest rate levels than before. The instruments used are designed to ensure the rapid and flexible implementation of tighter monetary conditions in the sub-markets considered key in terms of monetary transmission, i.e. both the interbank market and the swap market.

In addition, the Bank commits to directly meeting major foreign currency liquidity needs arising from covering the energy import, in the coming months. As current account items, other than the energy balance, are already positive overall, the measure will have a substantial impact on the supply and demand conditions in the foreign exchange market.

The MNB continuously assesses economic and financial market developments and will continue to use these instruments as long as warranted to maintain market stability.

MAGYAR NEMZETI BANK
Monetary Council
Budapest, 14 October 2022