Hungary's central bank on Monday cut the base interest rate by 25 basis points to 7.75% in a move that ran contrary to market expectations.
The bank last year hiked rates to 8% and then held them there for eight months in face of rising inflation brought about by a government austerity package. While inflation has started to fall from its peak of 9%, bank statements had indicated it was still worried about inflationary risks. In particular, the bank had said that wage inflation was a concern. However, central bank governor András Simor on Monday said that increases in gross wages were in part due to the whitening of the economy, and thus represented a smaller-than-thought inflationary risk. (monstersandcritics.com)