- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Magyar Nemzeti Bank (MNB) left the base rate unchanged at 6.50 percent at its 24 June meeting, holding the overnight deposit and collateralised lending rates at 5.50 percent and 7.50 percent, respectively, arguing that tight monetary conditions are still needed to counter persistent upside risks to inflation from strong services prices, elevated global food costs, volatile oil and tariff effects, all against a backdrop of weak domestic activity. The base rate has remained at 6.50 percent since at least January 2025. The unchanged ±100 bp rate corridor keeps interbank rates firmly anchored, and the Council reiterated that positive real rates are essential for anchoring expectations and safeguarding financial stability. Headline inflation accelerated to 4.4 percent in May while core inflation eased to 4.8 percent; the MNB now sees CPI averaging 4.7 percent in 2025, staying above the 3 percent ± 1 pp tolerance band until early 2026 and converging to the 3 percent target in early 2027. GDP was flat in Q1 and full-year growth is projected at a modest 0.8 percent, as strong household consumption is offset by protracted weakness in investment and exports; household loan growth is forecast to rise about 12 percent this year. The current-account surplus reached nearly EUR 0.94 bn in April and is expected to equal 2.0 percent of GDP in 2025 before widening again from 2026. Policymakers noted volatile global risk sentiment linked to geopolitical conflicts and tariff negotiations, alongside heightened oil-price swings, and concluded that a “careful and patient” approach is warranted, signalling that restrictive policy will be maintained until inflation returns to target on a sustainable basis.
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.