- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Hungarian National Bank (MNB) kept the base rate at 6.50 %, with the overnight (O/N) deposit and collateralised lending rates held at 5.50 % and 7.50 %, citing the need to preserve tight monetary conditions amid heightened trade-policy and geopolitical uncertainties and still-elevated inflation expectations. After a series of on-hold decisions since at least January 2025, the policy corridor remains at ±100 bp around the base rate. The Council reaffirmed the role of positive real rates in anchoring expectations and noted no changes to its daily FX swap tenders and weekly discount bill auctions that support short-term market rates. Headline inflation eased to 4.7 % in March and core inflation to 5.7 %, and is projected to dip further in April before hovering near the upper edge of the tolerance band, helped by lower oil prices and domestic measures such as food margin caps and voluntary service-price commitments; consumption is set to strengthen in 2025 on robust real wage gains and tax cuts, though industrial output remains weak and labour-market tightness is abating. February’s current-account surplus widened to EUR 750 mn and is expected to stay positive despite some narrowing as domestic demand recovers. Globally, lower energy and commodity prices mitigate inflation, but tariff hikes, rising food costs and volatile markets—amid falling European yields, a 25 bp ECB rate cut in April and a softer Fed path—pose upside risks to prices and to sentiment toward Hungarian assets. The Council signalled that a “careful and patient” stance is warranted and reiterated its commitment to sustain restrictive policy until inflation converges durably 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.