Hungary cuts cash to ease policy with rates static

Hungary cut the amount of cash banks can hold in an effort to ease policy without adjusting the benchmark interest rate.

Under the new rules announced by the National Bank of Hungary, domestic lenders can place no more than 900 billion forint, $3.6 billion, in three-month deposits at the three last monthly tenders of the year.

Currently, more than 1.6 trillion forint is held in the facility.

"The three-month deposit will be an integral part of monetary policy and the amount can be shifted significantly lower if that were to become needed. The cap will put downward pressure on interest rates on all markets,” said Deputy Governor Marton Nagy.

The cap was well under what many economists forecast.

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The forint has risen 1.9 per cent against the euro in 2016, the best performance of all the European Union easter member countries.

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