- Decision
- Lower
- Rate change
- 25 bps
- base rate
- 6.25%
The Monetary Council of the Magyar Nemzeti Bank cut the base rate by 25 bp to 6.25 % effective 25 February 2026, and lowered the overnight deposit and collateralised loan rates to 5.25 % and 7.25 %, citing favourable underlying inflation data and stable financial markets while stressing the need to keep real rates positive to secure lasting disinflation. After holding the base rate at 6.50 % from at least June 2025 through January 2026, this is the first move in the cycle. The corridor remains 1 pp below and above the base rate, and the central bank reiterated that FX-swap and other liquidity operations will preserve market stability. January headline and core inflation dropped to 2.1 % and 2.7 %, respectively, with the bank projecting CPI to stay below the 3 % target in coming months before a temporary uptick near the tolerance ceiling and a sustainable return to target in H2 2027; GDP grew 0.7 % y/y in 2025 Q4 and 0.4 % for 2025 as a whole, while labour-market tightness continues to ease from historically low unemployment. The current-account surplus is expected to hover around 2 % of GDP, and the stronger forint plus lower external costs are reinforcing disinflation. Globally, trade and geopolitical tensions persist, but inflation is easing gradually, the Fed is priced for two cuts in 2026, and markets see the ECB on hold, implying further regional rate declines. The Council signalled a “careful and patient” stance, judging inflation risks as balanced and pledging data-driven, meeting-by-meeting decisions to maintain tight, but now slightly less restrictive, monetary conditions.
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.