Hungary's central bank on Tuesday lowered its policy interest rate for the eighth successive time to a record low after the economy plunged further into recession in the fourth quarter and inflation pressures remained subdued. The decision was in line with economists' forecast.

The Monetary Council of the Magyar Nemzeti Bank lowered its two-week MNB bill rate by 25 basis points to 5.25 percent, following a similar reduction in February. The bank has lowered the policy rate every month since July, after holding it steady for seven successive months.

In the fourth quarter, the economy contracted at a faster rate pf 2.7 percent than the previous quarter's 1.7 percent fall, indicating that the ongoing recession has deepened. The downturn was driven mainly mainly by sharp declines in agricultural and industrial activity.

Hungary's annual inflation dropped to 2.8 percent in February from 3.7 percent in January and 5 percent in December, marking the fifth deceleration in a row. An inflation rate below the current level was last observed about seven years ago.

RTTNews