Hungary’s central bank has lowered its main interest rate from two and a half to two point four percent.<br /><br />It also left the door open to further moves to help boost the economy.<br /><br />With annual inflation there falling after the government imposed energy price cuts and local financial markets buoyed by a continued inflow of capital, the bank sees room for further rates cuts.<br /><br />It was the twenty second successive monthly reduction with the benchmark rate having fallen from a peak of seven percent in August 2012. <br /><br />Hungary is Central Europe’s most indebted nation and its government bonds are rated “junk” by credit rating agencies. <br /><br />The bank noted that the crisis in neighbouring Ukraine caused uncertainty, reiterating its cautious policy stance. However, it expressed confidence in Hungary’s ability to finance itself.<br /><br />The latest cut leaves only the Czech Republic, where borrowing costs are near zero, with lower rates than Hungary among the region’s non-euro zone countries.<br /><br />It has had to hike interest rates sharply several times over the past decade to contain market blowouts.<br /><br />Despite a marked improvement in Hungary’s finances in recent years, its high debt pile still leaves it vulnerable.<br /><br />Prices in April fell in annual terms for the first time in four decades.
