- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Magyar Nemzeti Bank (MNB) on 28 January 2025 kept the base rate at 6.50 %, with the overnight (O/N) deposit and collateralised lending rates unchanged at 5.50 % and 7.50 %, citing the need to counter higher-than-expected December CPI of 4.6 % y/y and rising upside risks from geopolitical tensions, exchange-rate depreciation and excise-tax changes that may delay a return of inflation to the target band. To reinforce transmission, the central bank will continue daily FX-swap tenders supplying overnight foreign-currency liquidity at an implied 6 %—a facility raised by 50 bp in December—which, together with strong discount-bill demand, has supported market stability. Domestic activity remained “subdued and dual” in 2024 Q4, with retail sales expanding but industrial output and construction contracting; growth is projected to revive on real-wage-led consumption and mid-2025 export gains from large FDI projects, while household lending is picking up and corporate credit demand stays weak. The current-account recorded a EUR 6.1 bn surplus in January–November 2024, and the bank expects a sustained external surplus as capacity comes on line and external demand improves in 2025 H2. Global risks stem from uneven growth—subdued in Europe but stronger in the United States and China—higher energy prices, and uncertainty around the divergent 2025 rate paths of the Federal Reserve and European Central Bank. Emphasising a “careful and patient” stance, the Council signalled that tight monetary conditions will be maintained until inflation expectations are firmly anchored and price stability is secured.
Rate evolution
From May 2025 to September 2026, the National Bank of Hungary lowered the central bank base rate by 100 basis points to 5.50%, holding it at 6.50% for most of the period before a February 2026 cut, a pause through May, 25-basis-point reductions in June, July and August, and a hold in September. The long hold reflected inflation above the tolerance band, persistent market services and core pressures, strong corporate repricing, high household inflation expectations and a desire to preserve tight conditions amid tariff, trade and geopolitical tensions, while growth stayed weak outside consumption. Through late 2025, the Monetary Council saw mostly upside risks to inflation and downside risks to growth, but by December and January it judged the inflation outlook balanced as disinflation broadened and the stronger HUF improved costs, despite uncertainty over start-of-year repricing and price restrictions.
After cutting in February because favourable underlying inflation and stable financial markets allowed it, the National Bank of Hungary held the central bank base rate at 6.25% from March to May as Iran-related energy shocks and global uncertainty revived upside inflation risks, even as inflation moved near the lower bound of the tolerance band. It then cut the rate to 6.00% on 23 June as the June forecast showed a significantly improved inflation outlook and balanced inflation risks, before reducing it to 5.75% on 21 July after June inflation fell to 1.7% and core inflation held at 2.0%, below the forecast, while slower food price growth and a persistently lower risk premium on domestic assets preserved room to manoeuvre despite escalating USA-Iran tensions and higher oil and European gas prices. The Monetary Council cut the central bank base rate by a further 25 basis points to 5.50%, effective from 26 August, and held it at that level at its 22 September meeting.