- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Magyar Nemzeti Bank’s Monetary Council kept the base rate at 6.50 percent at its 25 February meeting, leaving the overnight deposit and collateralised lending rates at 5.50 percent and 7.50 percent, respectively, as upside inflation risks, lingering geopolitical and trade uncertainties and the need to safeguard monetary-policy transmission argued for continued restraint. After also holding rates steady in January, the corridor remains 100 bp either side of the base rate. The Council said positive real rates and an unchanged corridor will support financial-market stability and the eventual return of inflation to target. Headline inflation rose to 5.5 percent y/y in January and core inflation to 5.8 percent, driven by stronger services, fuel and processed-food prices; the bank expects disinflation to resume in Q1 but that CPI will re-enter the 3 ± 1 pp tolerance band later than envisaged in December. GDP expanded 0.4 percent y/y in 2024 Q4 and 0.5 percent q/q, ending the technical recession, while real wages are rising and unemployment has eased to 4.3 percent. The current-account swung to a EUR 6.1 bn surplus in 2024, and the MNB foresees a “persistently significant” external surplus as exports strengthen from mid-2025 amid ongoing FDI inflows. Globally, firmer U.S. growth, a pick-up in China, higher euro-area inflation, stable but elevated energy prices, tariff tensions and geopolitical strains, alongside an expected Fed-ECB policy divergence, keep investor sentiment volatile. The Council pledged a careful and patient stance and said tight monetary conditions will be maintained until inflation is firmly on a path back to target.
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.