NBP Deposit Rate — What is the End-of-Day Deposit

Quick Answer

The NBP deposit rate is the lowest of the main NBP interest rates and sets the rate at which commercial banks can deposit surplus cash with NBP overnight. At the end of the day a bank parks excess liquidity with the central bank, earns interest at this rate, and retrieves the funds the next day. It is the safest but least profitable option, which is why it forms the floor of the interest rate corridor below the repo and lombard rates. No bank lends to another below it, so it indirectly shapes savings and term-deposit rates.

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What is the NBP Deposit Rate?

The deposit rate is the lowest of the main NBP interest rates. It determines the interest rate at which commercial banks can deposit surplus cash with NBP overnight.

How Does the End-of-Day Deposit Work?

1. A commercial bank has excess cash at the end of the day
2. Instead of keeping it unproductively, it deposits it with NBP
3. NBP accepts the deposit and pays interest at the deposit rate
4. The next day the bank retrieves the money with interest

This is the simplest and safest way to "park" money for a bank — but also the least profitable.

Why is the Deposit Rate Important?

Lower Limit for Market Rates

The deposit rate sets the floor for interest rates in the interbank market. No bank will lend money to another bank at a rate lower than what it can get from NBP — because it can always safely deposit it with the central bank.

Interest Rate Corridor

The three main rates create a corridor:

Deposit rate (floor)
     ↕
Reference/repo rate (middle)
     ↕
Lombard rate (ceiling)

Market rates (WIBOR, WIRON) move within this corridor.

Impact on Term Deposits and Savings Accounts

The deposit rate indirectly affects how much banks pay on term deposits. When the deposit rate is low, banks don't need to compete for customer deposits — and they offer lower interest rates.

Deposit Rate in Practice

Typically the deposit rate is 1-1.5 percentage points lower than the reference rate. For example, with a repo rate of 5.75%, the deposit rate is 5.25%.

When Do Banks Use the Deposit?

• At the end of the day when they have surplus after settlements
• During periods of uncertainty in the interbank market (they prefer NBP's safety)
• When they can't find a counterparty in the overnight market

How Freenance Can Help

Freenance helps track how NBP interest rates affect the interest rates on your term deposits and savings accounts — and whether it's worth looking for better offers.

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Related Articles

• Stopa repo NBP — czym jest i jak wpływa na Twoje finanse
• Stopa lombardowa — czym jest i jak wpływa na kredyty
• Jak zarządzać finansami w kryzysie gospodarczym — praktyczny poradnik

FAQ

What is an overnight deposit?

An overnight deposit is a short-term placement of surplus funds by a commercial bank with the central bank, with funds returned the next business day plus interest. It is a standard liquidity-management tool used by banks at the end of the day to park cash they cannot lend in the interbank market.

What is the overnight deposit rate?

The overnight deposit rate is the interest rate a central bank pays commercial banks for parking surplus cash overnight. In Poland, this rate is set by the NBP Monetary Policy Council and forms the lower bound of the interest rate corridor that constrains interbank market rates.

How does the overnight deposit facility differ from a retail term deposit?

The overnight deposit facility is available only to commercial banks dealing with the central bank, not to retail customers. Retail term deposits are offered by commercial banks to individuals, with rates set by each bank and typically longer maturities than one business day.

Why does the overnight deposit rate matter for everyday savers?

The overnight deposit rate indirectly shapes the interest commercial banks offer on savings accounts and short-term deposits. When central bank rates are low, banks have less incentive to compete for retail deposits, which tends to translate into lower savings rates for households.

Is the overnight deposit considered risk-free?

For commercial banks, an overnight placement with the central bank is considered the lowest-risk option because the counterparty is the central bank itself. However, this safety also explains why the overnight rate is the lowest in the rate corridor — yield reflects risk taken on the placement.