Forint Drops as Hungarian Central Bank Cuts Main Interest Rate

The Hungarian forint declined today after the nation’s central bank lowered its main interest rate for 22nd consecutive month, extending the longest monetary-loosening cycle in Europe, and signaled that additional rate cuts are likely.
The Magyar Nemzeti Bank slashed its key interest rate by 10 basis points to 2.40 percent today. The bank said in the statement:

The improvement in perceptions of the risks associated with the economy provided scope for a further cautious reduction in interest rates. The Monetary Council will decide on the need and possibility of reducing the base rate further after a comprehensive assessment of the macroeconomic outlook and developments in perceptions of the risks about the economy and in view of the baseline projection and alternative scenarios in the June issue of the Quarterly Report on Inflation.

Such comments mean that further rate cuts are probable, though they will likely be limited in scope.
USD/HUF advanced from 221.9000 to 222.8550 as of 16:27 GMT today.

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