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Hungarian central bank holds rates at 7.75%

Hungary’s central bank on Monday as expected held the base interest rate at 7.75%, with observers saying that the decision was most likely due to jitters on global capital markets.

The bank two months ago cut 25 basis points from the interest rate, the first cut since austerity measures introduced by government last year began to bite, forcing inflation to a high of 9% earlier this year.

The government introduced its austerity measures in an attempt to cut back the huge budget deficit, which at 9.2% in 2006 was by far the largest in the EU. (m&c)