Hungary rate-setters continue easing cycle

The National Bank of Hungary's rate-setting Monetary Council decided on Tuesday to cut the central bank's key rate by another 25bp – to 5% – for the eight monthly meeting in a row.
    The decision, which was in line with market expectations, brought the rate to a new historical low. The previous low, in place for more than half of 2010, was 5.25%.
    In a statement published after the meeting, the Council said "the outlook for both inflation and the real economy points to a further easing in monetary conditions"
    At the previous rate-setting meeting the Council said it would consider further rate cuts "if the medium-term outlook for inflation remained consistent with the bank's 3% target and the improvement in financial market sentiment was sustained".
    Sentiment on global financial markets has suffered in recent days because of concerns over a bailout for Cyprus, but Hungary's consumer price index fell to 2.8% year-on-year in February, a low not seen for almost seven years, mainly on the back of a 10% reduction in utilities prices mandated by the government.
    The rate-setting meeting on Tuesday was the first at which the MNB's new governor, György Matolcsy, participated.