- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Magyar Nemzeti Bank on 26 August 2025 left the base rate at 6.50 percent and kept the overnight deposit and collateralised lending rates at 5.50 percent and 7.50 percent respectively, judging that a “careful and patient” stance is required while headline inflation, though down to 4.3 percent in July with core at 4.0 percent, is projected to stay above the 3 ± 1 pp tolerance band through end-2025 before easing to target only in early 2027 amid buoyant consumption, volatile commodity prices and still-firm wage dynamics. The policy rate has been unchanged at 6.50 percent since at least January 2025. The unchanged symmetrical interest-rate corridor continues to deliver positive real rates, and the council reaffirmed that restrictive settings are essential for anchoring expectations. GDP growth remained subdued at 0.1 percent y/y in Q2 as services offset weakness in industry and agriculture; household lending is expanding briskly but corporate credit demand is still soft, while banks’ capital and liquidity buffers are described as strong. The current-account swung to a EUR 67 mn deficit in June and is expected to weaken temporarily this year before improving from 2026. Globally, lingering trade and geopolitical tensions persist despite an EU-US trade deal, with tariffs, higher food prices and strong service-sector pricing seen as upside risks to inflation even as energy prices ease and markets price multiple Fed and limited ECB cuts. The council reiterated that maintaining tight monetary conditions is warranted and signalled ongoing vigilance.
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.