- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Magyar Nemzeti Bank (MNB) kept the base rate at 6.50 %, with the overnight (O/N) deposit and collateralised lending rates unchanged at 5.50 % and 7.50 %, respectively, effective 28 May 2025, judging that tight monetary conditions remain essential amid still-elevated but easing inflation and persistent trade-policy and geopolitical risks. The hold prolongs a steady stance that has left the policy corridor unchanged since at least January 2025. No new liquidity measures were announced, and the Council reiterated that positive real rates underpin financial-market stability and the anchoring of expectations. Headline inflation fell to 4.2 % in April and core to 5.0 %, yet is projected to hover near the upper edge of the tolerance band in coming months as lower fuel and capped profit margins offset strong services prices; GDP was flat year-on-year in Q1, with services partly cushioning industrial and construction weakness, while consumption is expected to firm on higher real wages. Household lending is expanding but corporate credit demand is subdued, banks remain well-capitalised, and a EUR 1.05 bn current-account surplus was recorded in March, with a still-robust external position envisaged despite a likely temporary narrowing this year. Global sentiment has brightened, though higher tariffs, elevated food costs and uncertain energy prices keep medium-term inflation risks tilted upward, and firmer Fed and ECB rate expectations have pushed up long-term yields. The Council signalled it will maintain a “careful and patient” stance, stressing commitment to bringing inflation sustainably to target and readiness to preserve restrictive conditions as long as warranted.
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.