Hungary central bank cuts base rate to 5.25%

Hungary's central bank (MNB) announced Tuesday a cut in its main interest rate by a quarter of a percentage point to 5.25 percent, the seventh consecutive monthly cut and a move widely forecast by analysts.

"The Monetary Council has decided to reduce the base rate by 25 basis points to 5.25 percent," the MNB said in a statement on its website.

At a press conference following the rate cut, the bank's president, Andras Simor, presiding over his last meeting of the bank's rate-setting Monetary Council before his six-year term expires on Friday, said a narrow majority voted for the cut.

As with the six previous rate decisions, the four members of the Council nominated by Prime Minister Viktor Orban voted in favour of a cut, while Simor and two colleagues voted against.

The national currency, the forint, remained stable after the bank's decision, trading at 294.60 forints to the euro, against 294.50 just before the announcement.

The cuts have taken place against a background of uncertainty concerning Simor's replacement as governor.

The controversial Economy Minister Gyorgy Matolcsy is tipped to succeed the respected outgoing governor.

Analysts expect Matolcsy will be named by the parliament's economic and budgetary committee as the new governor on Friday.