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Hungarian central bank holds rates at 7.5%

Hungary’s central bank on Monday held its main interest rate at 7.5% for the second month in a row.

The interest rate had topped out at 8% in October 2006 as the central bank fought the effects of rising inflation, brought on by government austerity measures. The bank began cutting again last June as inflation fell away from a peak of 9%, but it has been cautious in the face of recent poor wage data and a slower than expected fall in inflation. 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. Hungary’s currency advanced as much as 1.3% to 254.12 per euro, and was trading at 256.51 by 11:44 a.m. in Budapest, from 257.51 on Nov. 23. (m&, bg)