Hungarys central bank not to cut rates before IMF/EU agreement rate setters.

By bne IntelliNews April 5, 2012
Hungary's central bank will be able to cut the base interest rate before the government reaches a financial aid agreement with the IMF and the EU, rate setters Gyorgy Kocziszky and Ferenc Gerhardt told Dow Jones in an interview. Kocziszky and Gerhardt are two of the four members of the banks rate-setting board appointed by the parliament in March 2011. They consider that once the government secures the deal, the bank will ease the monetary policy by cutting the rate gradually. Hungarys benchmark interest rate stands at 7% and is the highest in the EU. Hungary seeks to secure financial assistance of between EUR 15-20bn from the IMF and the EU. However, negotiations could be launched only after Hungary makes progress towards a timely and sustainable correction of its excessive budget deficit as well as ensuring the independence of the central bank.

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