- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 6.25%
The Monetary Council of the Magyar Nemzeti Bank (MNB) kept the base rate at 6.25 % on 26 May 2026, alongside an unchanged policy corridor of 5.25 % for the overnight (O/N) deposit rate and 7.25 % for the O/N collateralised loan, judging that a markedly improved but still fragile inflation outlook and persisting geopolitical risks warrant a “careful and patient” stance to safeguard price and financial stability. After a single 25 bp cut in February that lowered the base rate from 6.50 % to 6.25 %, all subsequent meetings have maintained that level. The central bank will continue to secure positive real interest rates and highlighted the importance of FX-market stability for anchoring expectations. April headline inflation eased to 2.1 % and core inflation to 2.2 %, both near the lower edge of the tolerance band, while GDP expanded 1.7 % y/y in 2026 Q1 amid rising retail sales and industrial output and a still-low unemployment rate. A stronger forint and extended fuel-price and margin caps are tempering price pressures, although high global energy and commodity prices pose upside risks; domestic risk premia have fallen since the March Inflation Report, helped by improved sentiment over EU funds, fiscal prospects and potential euro adoption. The Council noted that oil and European gas prices remain elevated due to tensions surrounding Iran, and market expectations now price ECB and CEE rate increases later this year while US rates are seen steady, pushing developed-market long-term yields higher. Policymakers reaffirmed that tight conditions and data-driven decisions—taking into account incoming information and the June Inflation Report—are essential to secure the inflation 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.