Hungary's central bank continued its easing cycle this month and cut the interest rate on expected lines to a record low, amid escalating tensions between Russia and the West over the Crimean crisis.

The Monetary Council of the Magyar Nemzeti Bank decided to cut the base rate by 10 basis points to a record low 2.60 percent. The decision was in line with economists' expectations.

The central bank has been steadily cutting interest rates every month since August 2012. The base rate has been reduced by 445 basis points thus far in the easing cycle.

At the start of the year, the bank slightly slowed the pace of easing with a 15 basis points cut versus the 20 basis points reductions in each of the past five months.

The rate cuts are likely to boost the economy that is staging a strong comeback from a recession in 2012. Gross domestic product rose 2.7 percent year-on-year the fastest in at least 12 quarters.

In February, inflation edged up to 0.1 percent from zero in the previous month. In December, the figure hit a 43-year low of 0.4 percent.

The government is apparently worried about the weak forint and the impact of the Ukraine crisis as the country heads into parliamentary elections due on April 6.

Economists expect the latest rate cut to be the last in the cycle as the economy has started showing signs of a pick up in domestic demand.

"The forint has performed poorly, which is a particular concern in light of the country's high level of foreign currency denominated debt," Capital Economics Emerging Markets Economist William Jackson said.

"Further rate cuts would risk triggering a fresh sell-off in the currency."

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