Hungary stays put on interest rates

Hungary´s central bank kept its main policy interest rate unchanged, but markets were waiting on details of planned changes to its framework for monetary policy which might imply a slight loosening in financial conditions.

The monetary authority kept its main deposit rate at 0.90%, as had been widely anticipated.

Details of the mooted change to its three-month deposit operations were scheduled to be published at 1400 BST.

Rate-setters in Budapest were set to announce a modification of the central bank´s liquidity absorption cap.

Analysts were anticipating that it would be lowered from between 1.6 and 1.7trn forint at present to 1.5trn, with a further reduction 1.0trn in December already in the cards.

"One point we would note is that commercial banks have already reduced their use of the three-month deposit facility substantially since the plan was first mooted, but interbank interest rates haven’t fallen significantly suggesting there has been little impact on monetary conditions so far," said William Jackson, senior emerging markets economist at Capital Economics.