- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.25%
The Monetary Council of the Hungarian National Bank (MNB) left the base rate unchanged at 6.25 % effective 25 March, with the overnight (O/N) deposit and O/N secured loan rates kept at 5.25 % and 7.25 %, respectively, judging that heightened geopolitical tensions, a sharp rise in energy prices and elevated global risk aversion warrant “cautious and patient” policy to anchor inflation expectations and safeguard market stability. After maintaining the base rate at 6.50 % throughout 2025, the Council delivered a 25 bp cut in February 2026 before pausing at the current meeting. The interest-rate corridor remains ±100 bp around the base rate, and the MNB will continue to supply FX liquidity—activated on 10 March to cover energy-import needs—to preserve orderly market conditions while ensuring a positive real policy rate. Headline inflation fell to 1.4 % y/y in February (core 2.1 %), but the Bank expects surging energy costs to lift inflation above the 3 ± 1 pp tolerance band from Q3 2026 before it returns sustainably to target in H2 2027; average CPI is projected at 3.8 % this year and 3.7 % in 2027. GDP grew 0.8 % y/y in 2025 Q4, with household consumption buoyant amid rising real wages, though investment and net exports lag; growth is forecast at 1.7 % in 2026 and 3.0 % in 2027, with risks skewed toward weaker activity. The current account is seen narrowing temporarily in 2026 before settling around a 1 %-of-GDP surplus by 2028. Citing unchanged ECB and Fed stances, a recent Polish rate cut and escalating Middle-East conflict that has pushed Brent briefly to USD 120, the Council reiterated that tight monetary conditions will be maintained and future moves will be “prudent and data-led.”
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.