The National Bank of Hungary says it is cutting its main interest rate by a quarter percentage point to a new all-time low of 5.25 percent.
The rate reduction, announced Monday and to take effect April 27, is in step with market expectations and the tenth consecutive cut since July 2009.
Analysts say that while food prices have risen more than expected recently, domestic demand remained weak and the central bank's medium-term inflation target of 3 percent was still attainable, making room for the rate cut.
Hungary's currency has strengthened against the euro and yields on government bonds have fallen, partly because of the sweeping election win by the center-right Fidesz party. These factors also support monetary policy easing.
The central bank last cut rates on March 30.
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