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Hungary Has Room to Cut Interest Rates, Policy Makers Say

Hungary’s central bank has room to lower the European Union’s highest benchmark rate as the country’s risk assessment improves and the inflation target remains within reach on the policy horizon, central bankers Andrea Bartfai-Mager, Ferenc Gerhardt and Gyorgy Kocziszky said.

Interest-rate reductions must be cautious and gradual as policy makers seek to move along with market sentiment and avoid forcing anything, Bartfai-Mager said in an interview in Budapest yesterday. Cuts shouldn’t exceed a quarter-point at a time, Gerhardt said in the same interview, which included three of the four non-executive rate setters who have driven policy easing since August. The country’s “equilibrium interest rate” is 4.5 percent to 5 percent, Gerhardt said.