UPDATE 2-Unfazed by IMF doubts, Hungary cuts rates again

* Third 25 bps cut in as many months, main rate falls to 6.25 pct

* Rates could fall further still if risk, CPI outlook allow

* Concerns over weak economy trump CPI, market risks

* Economists, markets losing faith in IMF credit deal

BUDAPEST, Oct 30 (Reuters) - Hungary's central bank cut interest rates again on Tuesday, prioritising growth, and hinted at more easing even though doubts about an aid deal threaten to limit room to relax policy.

The bank's Monetary Council cut official borrowing costs for a third successive month, by 25 basis points to 6.25 percent despite inflation concerns and worries over the chances of an international financing deal.

``Expected developments in inflation and financial markets, as well as persistently weak demand, warrant a lower interest rate level,'' the council said in a statement.

``The Council will consider a further reduction in interest rates if data becoming available in the coming months confirm that the improvement in financial market sentiment persists and the medium-term outlook for inflation remains consistent with the 3 per cent target.''

Recession-hit Hungary, the most indebted economy in the European Union's eastern wing, asked for help from the International Monetary Fund and the EU last year, but talks are slow and the government said on Monday that ``life would go on'' without a deal. That has raised doubts about Budapest's commitment to an agreement.

The central bank said a deal was crucial to improve risk perceptions and lower bond yields in a lasting way, boost lending activity and improve the investment climate in the ``junk''-rated central European country of 10 million people.

The rate cut had been expected but the forint firmed to 283.73 by 1613 GMT, from 284.51 before the rate cut announcement at 1300 GMT.

The decision by the seven-strong panel shows newer dovish members appointed by parliament last year are firmly focused on cutting rates to try and pull the economy out of recession.

Governor Andras Simor and his deputies, appointed under a previous government, were outvoted at the past two meetings by policymakers selected last year by parliament, where Prime Minister Viktor Orban's Fidesz holds a two-thirds majority.

The division of Tuesday's vote will not be known until Nov. 14, but as before, Simor said the decision had a ``slim majority'' and warned that inflation trends were not fully consistent with the bank's 3 percent inflation target.

``(Recent fiscal adjustment) measures (such as tax rises) do not influence short-term inflation prospects on merit, but they may worsen mid-term, longer-term inflation prospects,'' Simor told a press briefing after the rate decision.

``They can also weigh on potential economic growth.''

He said the economy was not expected to pick up until next year as export markets recover.

The government announced 764 billion forints ($3.49 billion)worth of deficit cuts for 2013 this month, mainly tax increases, as Budapest struggles to keep its shortfall below 3 percent of economic output and avoid the loss of EU development funds.