"The National Bank of Hungary (MNB) cut its benchmark interest rate by 25 basis points to 4.25 per cent on Tuesday. The move, the 11th consecutive monthly reduction by the monetary policy council, was largely expected by the markets, despite the recent sell-off in emerging market assets.
“Hungary’s central bank has become renowned for never missing an opportunity to trim interest rates to support the economy. Today’s rate cut shows that it still saw one, despite the extreme market volatility stemming from the Fed’s plans to scale back its programme of quantitative easing,” London-based consultant Nicholas Spiro told beyondbrics.
According to Spiro, the monetary policy council is “clearly taking the view that markets overreacted to the Fed’s plans to withdraw stimulus,” and expects, or hopes, that volatility will eventually subside. But Hungary is treading a narrow, and ever more risky line."
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