- Decision
- Lower
- Rate change
- 25 bps
- base rate
- 6%
The National Bank of Hungary’s Monetary Council cut the central bank base rate by 25 basis points to 6.00% effective 24 June 2026, lowering the O/N deposit rate to 5.00% and the O/N collateralised loan rate to 7.00%, after concluding that the inflation outlook had improved significantly as the stronger forint and lower energy and food prices pushed inflation down while easing geopolitical tensions made the global risk environment more favourable. In May, inflation and core inflation fell to 1.8% and 2.0%, and the June forecast puts average inflation at 1.8% in 2026, 2.3% in 2027 and 3.0% in 2028, with price growth expected to remain below the central bank’s 3% target through the rest of 2026 and 2027. Hungary’s GDP rose 1.7% in 2026 Q1, mainly on stronger domestic demand, and the central bank expects 2.0% growth in 2026 as household consumption drives the pickup; retail sales and industrial production both increased in April. The current account balance is expected to deteriorate temporarily in 2026 and then remain close to equilibrium, while the Council said euro sale transactions related to energy import coverage had helped maintain foreign exchange market stability and will remain available until 30 June 2026. The central bank said global oil and European gas prices had started to decline after the easing of the Iran conflict, though they remained above pre-conflict levels, and signalled room for further rate cuts through the summer if favourable developments persist, while maintaining a positive real interest rate.
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.