Gov’t Caps Interest Rates for Large Investors in Hungary
- 22 Nov 2022 5:45 PM
- Hungary Around the Clock
The interest rates paid by banks on deposits of Ft 20 million or more owned by institutional investors may not exceed the level of the three-month discount T-bill rate, Economic Development Minister Márton Nagy announced.
The rate of the three-month T-bill currently stands at 11-12%.
The cap will apply to bank deposits made by investment companies, investment funds, home savings banks, insurance companies, and individuals until March 31, 2023.
Nagy criticised institutional investors for taking advantage of the MNB’s one-day deposit facility offering a risk-free 18% return.
He said the new measure will help the smoother functioning of the government securities market, while channelling financial sources from economic actors to the economy.
Portfolio writes that the government wants to support the treasury bills market and incentivise institutional investors to invest directly in government securities. Government bond yields moved lower on the news.
The government’s latest move to intervene in the market will impair the efficacy of monetary transmission, according to Portfolio.
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