Central bank cuts rates to lowest in over three years

Hungary's central bank cut its key rate by 50 basis points to 7.0 percent on Monday, and has now delivered combined rate cuts of two and a half percentage points in four months to ease a deep recession.
Hungary's key base rate is now at its lowest level since July 2006 when the government announced a surge in the budget deficit which prompted a sharp weakening in the forint.
In a Reuters poll last week, 23 out of 25 analysts predicted a half percentage point cut for Monday while one analyst forecast a 25 basis point reduction, and one said the bank would hold fire. Analysts expect both Hungary and neighbouring Romania, where the key central bank rate is 8.0 percent, to cut interest rates further to help their economies recover from a slump this year.