Monetary tightening continues, with almost HUF 2,600 billion of liquidity now sterilized in MNB's long-term deposit

Budapest, Wednesday 12 October 2022. The Magyar Nemzeti Bank (MNB) has held its second tender for its variable-rate, long-term deposit instrument, accepting bids worth HUF 506 billion, now sterilizing almost HUF 2,600 billion of liquidity in the new instrument. With the long-term deposit tender, the MNB continued to absorb substantial amount of free liquidity and thus to tighten monetary policy.

During the 2-month variable-rate deposit tender on 12 October, 11 banks submitted bids totalling HUF 522 billion, of which the MNB accepted bids worth HUF 506 billion. The starting value date of the 2-month transaction is 13 October, while the maturity date is 1 December 2022, as in the previous week. The weighted average spread of the accepted bids was 1.36 percent, above the reference one-week deposit rate.

Today's tender also serves to absorb free banking system liquidity as the MNB continues its monetary tightening. Liquidity sterilized in long-term deposit instruments reached close to HUF 2,600 billion with today's tender.

In response to bank demand, the MNB will hold another liquidity-absorbing deposit tender next Wednesday. Thereafter, the central bank will normally hold a long-term deposit tender on the first Wednesday of each month, with a value date of Thursday, but additional tenders may be held in duly justified liquidity cases.