Hungary's central bank on Tuesday reduced its main interest rate further to a new record low, extending the easing program that began more than a year ago, as economic activity remained subdued and inflation fell sharply. The decision was in line with economists' forecast.

The Monetary Council of the Magyar Nemzeti Bank slashed its two-week deposit rate by 20 basis points to 3.6 percent at today's meeting, following a similar cut at last month's meeting. The bank has lowered the rate every month since July 2012, after holding it steady for seven months in a row.

Last month, the central bank had reduced the pace of its ongoing easing cycle to guard the weakening currency against the potential risk of a sell-off.

Hungary's consumer price inflation eased more-than-expected to a near-record low of 1.3 percent in August from 1.8 percent in July, reflecting the government's recent measures to reduce the costs of energy and utilities. Inflation has been on a declining trend for nearly a year.

In the second quarter, the economy emerged from a year-long recession. Gross domestic product rose modestly by 0.5 percent, recovering from the first quarter's 0.9 percent annual fall. The recovery followed five quarters of successive contractions.

UkrAgroConsult