Hungary interest rate cut to record low

Hungary's central bank on Tuesday lowered its main interest rate 25 basis points to a record low of 4.75 percent, the ninth consecutive cut, in an effort to pull the EU member state out of recession.

The decision is the second under the new MNB governor, Gyorgy Matolcsy, controversially appointed by Prime Viktor Orban in March amid fears of growing government control over monetary policy.

Earlier comments by Matolcsy have sparked concerns among investors that the government will encourage the central bank to apply "unorthodox" measures to trigger growth in the economy which shrank 1.7 percent in 2012.

Worries over the impact of the rate cuts on inflation have been eased, however, by inflation reaching its lowest level since 1974 in March.

Analysts say the interest rate could drop further in May by another 25 basis points to 4.50 percent.

The national currency the forint fell sharply in advance of the council's statement after a media report announced a rate cut of 400 basis points to 1.0 percent but recovered within minutes from 302.70 against the euro to 300.80 by 1215 GMT.

The bank was scheduled to publish a statement explaining its decision at 1300 GMT, with Matolcsy having abandoned the previous practice of giving a news conference.