Key interest rate further decreased

The Monetary Council of the National Bank has reduced the central interest rate by 50 basis points again to 10.5%, reported Hungarian channel Inforadio.


The decrease was unexpected by financial analysts as the decision was not made at a rate setting meeting, but the market reacted well. According to István Madár, financial analyst of portfolio.hu there are three reasons behind the rate cut; one is the speedy fall of the inflation rates parallel with the inflation fall inside the eurozone. The second reason is that simultaneously the fear of recession had risen in the region and the Hungarian economy can count on a long-term economic relapse. The third reason is that the capital market seems to be stabilized and there are no speculative investments.
After the decision, the forint automatically weakened for a short period, but picked up quickly. In Madár’s opinion it is up to the international environment when the next cut can be made to work down the 300 basis point raise that was decided in October.

The BpSun Staff

12.12.2008