by pna
The
Monetary Council of Hungary's central bank reduced the benchmark interest rate by 25 base points to
6.25 percent on Tuesday, the third such move in as many months.
The move was widely anticipated by financial analysts who are predicting a year-end rate of 6 percent and further reductions in 2013.
With Hungary in recession, many feel the rate cut is a move to stimulate the economy into performing better. Others are concerned the lower rate might trigger a spike in inflation.
Several monetary council members said earlier that the country was cautiously easing rates, which they felt would not influence inflation, which by law, the central bank is charged with reining in.
Four of the seven members of the bank's monetary council are appointed by the government, which has been calling for lower interest rates all year. These four have outvoted central bank governor Andras Simor and his two deputies in the previous two decisions to cut rates.
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