Big Hungarian Rate Cut Signals New Confidence.

"The National Bank of Hungary cut its main lending rate by one percentage point, to 8.5 percent from 9.5 percent, signaling a new confidence that the country has emerged from its financial crisis. Central Bank Governor Andras Simor justified the size of the rate cut - far larger than the half-percentage-point trim the market had anticipated - by citing improving global conditions, Hungary's successful Eurobond issue, and the relative stability of the forint...." [The Wall Street Journal/Factiva]

Reuters adds that "...as a further positive sign of improving investor confidence, earlier this month Hungary sold a eurobond and boosted sales at its forint-denominated bond auctions, cutting reliance on a $25.1 billion International Monetary Fund-led (IMF) package secured last year. 'We can cut rates further if inflation remains under target on our policy horizon and our risk assessment continues to improve,' Simor said after the rate decision...." [Reuters/Factiva]

MTI reports that "...dealers say that the National Bank of Hungary's...100 basis-point rate cut on Monday afternoon exercised no impact on the forint, which traded at around 268 to the euro both before and after the rate-decision. Dealers note that the forint weakened to 267.80 from 266.50 against the euro prior to the National Bank of Hungary's Monday-afternoon rate-decision on news that a member of the Latvian government coalition would not sign Latvia's IMF agreement...." [MTI - EcoNews (Hungary)/Factiva]