The National Bank of Hungary has cut its interest rate for the ninth consecutive time and it now stands at 5.5%.

Analysts at RBC Capital Markets, said: "The relative strength of the Hungarian forint, the dire state of the domestic economy and better inflation news all support the case for lower interest rates."

Hungarys economy fell by -6.3% in 2009 and had an annual inflation rate of 5.7% in February 2010, down from 6.4% the month before.

The bank stated that although higher taxes and state-controlled prices were putting upward pressure on inflation, persistently weak domestic demand was pushing prices down, however inflation is expected to drop below the banks medium term target of an annual 3% in 2011.