No surprise at the 1-week deposit tender today: the interest rate went up to 4.3%

HUNGARY - In Brief 27 Jan 2022 by Istvan Racz
Just as we predicted two days ago, the 1-week deposit rate was raised by the MNB by 30 bps today. No great achievement on our part: as the Monetary Council raised the base rate by 50 bps on Tuesday, and they said that the two rates will need to converge from now on, it was quite easy to find out the likely size of today's rate action. We do not know of any formal poll on this latter move, but as we heard other analysts reacting to Tuesday's event, they just cannot be surprised too much now.As usual, the MNB accepted all bids at the tender, and so there is now HUF9761bn sitting in the 1-week deposit instrument. Yes, it is 16.5% of this year's expected GDP, so indeed quite a lot for LCY liquidity in the banking sector, which needs sterilisation at all times.The next deposit rate hike is likely to come in one month from now, except if the EUHUF rate breaks through the 360 line with a great thrust in the meantime, for whatever reason.

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