- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.5%
The Monetary Council of the Magyar Nemzeti Bank on 21 October 2025 left the base rate unchanged at 6.50 percent and kept the overnight deposit and collateralised lending rates at 5.50 percent and 7.50 percent, respectively, stating that tight monetary conditions remain essential to contain still-elevated inflation and to guard against trade-policy and geopolitical risks. The move prolongs a steady stance that has held the base rate at 6.50 percent throughout 2025. The unchanged ±1 percentage-point corridor remains the core operational framework. Headline inflation stayed at 4.3 percent in September and core inflation at 3.9 percent, both above the 3 percent ±1 pp tolerance band; price growth is expected to ease to the band only in early 2026 and reach the 3 percent target sustainably in early 2027. Economic performance is mixed, with slowing retail sales, falling industrial and construction output in August, but improving consumption and business confidence and a still-low unemployment rate; stronger domestic demand and export gains are projected from next year. Household lending continues to rise while corporate credit is subdued, and banks’ capital and liquidity positions remain strong. The forint has firmed since January, helping to temper producer and import prices, and the current account posted a EUR 365 million surplus in August, though a temporary narrowing is foreseen in 2025 before a rebound in 2026. Reaffirming its “careful and patient” approach, the Council signalled that maintaining restrictive policy is warranted to anchor inflation expectations and protect foreign-exchange stability on the 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.