The National Bank of Hungary (MNB) unexpectedly cut its benchmark interest rate a quarter percentage point. The Monetary Council lowered the two-week deposit rate to 12.25% from 12.5%, the first cut since January 16, 2003. The MNB almost doubled the rate last year to the highest among future EU members.
The government should cut spending before entering the EU exchange rate mechanism. “It only makes sense to enter ERM II when a country is close to the adoption of the euro,” the MNB president Zsigmond Jбrai said. “We need stringent fiscal and wage policies to keep inflation low and the currency stable.”
Hungary’s GDP reached Ft 18,575 billion in 2003, the Central Statistics Office (KSH) revealed. An earlier Finance Ministry forecast put last year’s GDP at Ft 18,750 billion.
Source: Budapest Business Journal
