- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 5.5%
The National Bank of Hungary (MNB) Monetary Council held the base rate at 5.50% in September, saying current settings were needed to achieve the inflation target sustainably as high energy prices and uncertain global economic and financial conditions warranted caution. Over the past year, the rate remained at 6.50% through January before four 25-basis-point cuts in February and June-August brought it to its current level. Effective 23 September, the overnight deposit and collateralised loan rates remain at 4.50% and 6.50%, respectively, preserving a symmetric corridor around the base rate. The Council also lowered its medium-term inflation target to 2.5% from 1 January 2028 and retained the symmetric ±1 percentage point tolerance band. Inflation developments were below expectations, with headline inflation at 1.3% and core inflation at 2.0% in August, although the projected 2027 inflation path shifted upward from June. The MNB projects GDP growth of 1.8% in 2026, mainly supported by household consumption, while industrial production continued to expand. The current account is expected to be close to equilibrium this year, and the forint remained in the stronger range observed in recent months. Global oil and gas prices increased over the past month, while developed-market long-term yields remained near multi-decade highs. The Council will continue to ensure positive real interest rates and set policy cautiously and based on data, with Hungary’s risk assessment primarily shaped by the fiscal path, euro adoption and the external market environment.
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.