Hungarian Forint down on possible benchmark rate cut

Hungarian Forint down on possible benchmark rate cut

08-24-2009 12:12

The Hungarian currency started this week’s trading session with a decline from the strongest level in nearly 10 days. The central bank´s meeting of today is expected to result in a reduction in the national base interest rate to a historical low after the socialist epoch. The Magyar Nemzeti Bank, Hungary's central bank, will announce its interest rate decision this Monday at 12:00 a.m., as economists forecast a rate cut to a record low of 8% in comparison with the current level of 8.5%, which is the strongest level in the EU together with Romania. The Forint is falling ahead of the interest rate decision that could be the result of the present measures by the administration lacking to pull the Hungarian economy out of the deepest slump in almost two decades. Indeed, joblessness is twice as high in comparison to the previous year, while the rescue plan by the International Monetary Fund (IMF) was not sufficient to restore economic growth in Hungary.

Hungary's Forint down

Although expectations indicate a 0.5% rate reduction, the central bank could startle again by announcing a rate cut of 1%, which would affect the Forint´s results negatively, resulting in a further downfall.