Tuesday, November 26, 2013

Hungary cuts rate to 3.20%, 16th cut in row

    Hungary's central bank cut its policy rate for the 16th time in a row, trimming its base rate by another 20 basis points to 3.20 percent, a move that was largely expected.
    The National Bank of Hungary has now cut rates by 255 basis points this year and by 380 points since August last year when it began its current easing cycle. The central bank did not give any immediate explanation for its decision.
    At its last meeting in October, the central bank said "further cautious easing of monetary conditions may follow" in light of the outlook for inflation and the economy.
    Hungary's inflation rate fell to 0.9 percent in October from 1.4 percent in September, a low for the year and well below the bank's medium-term target of 3.0 percent.
    Last week the central bank's governor, Gyorgy Matolcsy, said the bank had room to cut rates further and to provide further loans to help economic activity while the OECD raised its growth outlook to 1.2 percent for this year and 2.0 percent for 2014 from a previous forecast of 0.5 percent and 1.3 percent.
    Last year Hungary's economy contracted by 1.7 percent.
    Hungary's Gross Domestic Product rose by 0.8 percent in the third quarter from the second quarter for annual growth of 1.7 percent, the second quarterly expansion in output after five consecutive quarters of economic contraction.



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