BUDAPEST, Hungary (AP) — European Central Bank President Mario Draghi on Friday defended his Hungarian counterpart against the government's efforts to limit his independence and authority over monetary policy.

Draghi emphasized the importance that central banks remain independent of government influence.

Prime Minister Viktor Orban and his government have over the past two years frequently been critical of National Bank of Hungary President Andras Simor's policy decisions. Orban's government also has tried to diminish Simor's influence over monetary policy, but under international pressure - including from the ECB - has relented.

"It's an opportunity to pay (Simor) a tribute of gratitude for his work," Draghi said while speaking at a conference hosted by the NBH. "I want to acknowledge his commitment ... to Europe and to his country."

Simor and his two deputies have in recent months consistently been outvoted by the four, government-backed members of the rate-setting Monetary Council. That resulted in the NBH lowering its key interest rate during each of the last four months - from 7 percent in August to 6 percent now - to align itself with government efforts to boost economic growth.

In his speech, Draghi appeared to support Simor in his votes against the rate cuts, noting that such aggressive interest rates reductions could fuel inflation.

Hungary is struggling to fuel economic growth - gross domestic product contracted an annual 1.5 percent in the third quarter of 2012 - while also coping with the highest inflation rate in the European Union, an annual 6 percent in October.

While stressing that Hungary had made "considerable achievements" in improving the economy, Simor also criticized some of the government's measures, including exceptionally high taxes on banks and other sectors as well as the nationalization of private pension funds.

"The frequent changes in the regulatory environment and the windfall taxes have rendered all commercial calculations concerning the future uncertain, leading to a predictability chaos," said Simor, whose six-year term ends in March. "The primary problem is not the fiscal deficit by rather a lack of confidence." Continued...