Hungary: Central Bank cuts rates in line with expectations
September 25, 2012
At its latest monetary policy meeting on 25 September, the Central Bank voted to cut the base rate by 25 basis points to 6.50%. The decision was in line with market expectations and followed a similar move in August to rekindle faltering economic growth. The decision to further ease the reins followed on the deterioration of the Bank's growth outlook. In the same vein, the Bank stated that "the outlook for domestic economic growth has deteriorated recently and output is expected to grow only slowly in 2013". Regarding price developments, the Monetary Council expects that "the inflation target is likely to be met as the direct effects of cost shocks wear off". In addition, the Bank maintained a dovish tone and acknowledged that it "will consider a further reduction in interest rates if the improvement in financial market sentiment persists and medium-term upside risks to inflation remain moderate".