Hungarian central bank cuts base rate to 1.80 pct

The Hungarian central bank's rate-setting Monetary Council reduced the bank's base rate by 15 basis points from 1.95 percent to 1.80 percent with effect from 22 April, the bank announced Tuesday.

A statement issued by the bank said that there was a degree of unused capacity in the economy and inflationary pressures were likely to remain moderate for a sustained period.

The real economy is likely to have a disinflation impact at the policy horizon and the negative output gap is expected to close only gradually, the bank said.

The Monetary Council noted that Hungary's persistently high external financing capacity and the resulting decline in external debt had contributed to the reduction in its vulnerability.

In the Monetary Council's judgment, a cautious approach to monetary policy is warranted due to uncertainty in the global financial environment.

Cautious easing of the policy rate may continue as long as it supports the achievement of the medium-term inflation target of 3 percent, the statement said. Enditem