Hungary’s Central Bank appears to be recognizing that economic growth is a serious concern for the country’s long-term fiscal health. This is the background to the 25 bps cut in rates to 6.75% back in August, according to newly released minutes of the meeting by the Monetary Council. According to the WSJ blog, concern about the country’s economy, which slipped 1.3% in the second quarter of 2012, marks a significant shift in priorities. The bank had to face criticism that the drop in interest rates could put the country on the path to inflation. Another meeting is scheduled for September, but rates analysts appear uncertain still if the bank will continue in its view that further rate cuts are necessary to help turn the economic tide.
