UPDATE 1-Hungary cbank holds rates at 5.25 pct amid market falls

* Cbank keeps base rate steady again, as expected

* Decision comes after IMF/EU talks fizzle, markets fall

(Adds background, analyst)

BUDAPEST, July 19 (BestGrowthStock) – Hungary’s central bank kept
interest rates (NBHI: ) on hold as expected at a record low of
5.25 percent (HUINT=ECI: ) on Monday, despite market falls after
talks broke down between the government and lenders.

The bank’s regular rate-setting meeting on Monday followed a
suspension of a regular review of Hungary’s financing programme
by the International Monetary Fund and the EU on Saturday.

Hungary’s markets sold off on Monday after talks with
lenders fell through, rattling investor confidence in the
government’s policies and raising concerns over the country’s
debt vulnerability.[ID:nLDE66I0BE]

The central bank’s decision was in line with expectations of
all 25 analysts in a Reuters poll last week (HUREPO1: ).

Some analysts said on Monday that if a weakening of the
forint (EURHUF=D2: ) continues and the currency eases past levels
of 300 to the euro, the bank might opt to hike rates.

At 1215 GMT, the forint (EURHUF=D3: ) traded at 289 versus the
euro, a touch weaker than 288.35 shortly before the interest
rate decision.

The bank had reduced its key rate between July 2009 and
April 2010 by a combined 425 basis points, but left them on hold
in May and June citing risks to inflation and market risks.

Central bank Governor Andras Simor will hold a news
conference at 1300 GMT.

Analysts said the bank’s decision to hold rates was
appropriate.

“In this situation, the central bank must calm markets, and
that is what they are presumably going to do today,” said Matyas
Kovacs at Raiffeisen, referring to the pending press conference.

“We await the press conference but look for (Governor) Simor
to drive home the seriousness of what’s happened and also talk
more about the impact of banking tax and the threats to NBH
independence,” added Peter Attard Montalto at Nomura.

(Reporting by Marton Dunai and Krisztina Than)

UPDATE 1-Hungary cbank holds rates at 5.25 pct amid market falls