Hungary sees improved economic climate, confidence, minutes of unscheduled meeting report

By Richard Connell

New York, Dec. 19 - The Monetary Council of the Magyar Nemzeti Bank utilized the improved economic outlook since its extraordinary rate increase on Oct. 22 and cut its base rate by 50 basis points to 10.5% at an unscheduled meeting on Dec. 8, according to minutes released by the bank.

The council of the Hungarian central bank noted that uncertainty concerning external funding had dropped with the announcement of an international financial support package, resulting in a restoration of confidence in the economy.

The council also pointed out that the outlook for inflation remained positive, and that the inflation target of 3% could be reached even with a cut in rates.

The majority of the council voted for the rate cut in hopes of reducing the risks in financial stability.

Since the bank raised the base rate by 300 bps on Oct. 22, it has twice cut the rate by a total of 1% to 10.5%.

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