The National Bank of Hungary (MNB) cut its base rate by 25 basis points to 5.75% with effect from 22 July 2026, saying inflation developments were more favourable than in the June baseline, the lower risk premium on domestic assets had persisted, and the macroeconomic outlook remained in line with the June forecast. The move followed a year in which the base rate was held at 6.50% from July 2025 to January 2026, then cut by 25 basis points in February to 6.25% and again in June to 6.00%. The overnight deposit rate was reduced to 4.75% and the overnight collateralised loan rate to 6.75%. June inflation fell to 1.7% and core inflation was unchanged at 2.0%, both below expectations and the June Inflation Report forecast, and the Council said price growth will stay below the 3% target for the rest of 2026 and throughout 2027 before returning to target in 2028 H1; domestically, industrial production and retail sales continued to increase in May, private sector wage dynamics slowed from previous years but real wages rose strongly, and unemployment remained low in international comparison. The Council also reiterated that stability in domestic financial markets, especially the foreign exchange market, helps anchor inflation expectations. Globally, investor sentiment remains shaped by escalating USA-Iran tensions, with oil and European gas prices rising in recent weeks, developed-market long-term yields high and higher over the past month, and markets expecting one more rate increase
National Bank of Hungary2026-07-21
National Bank of Hungary cuts base rate by 25 basis points to 5.75%
The National Bank of Hungary cut its base rate by 25 basis points to 5.75% effective 22 July 2026, alongside reductions in the overnight deposit rate to 4.75% and the overnight collateralised loan rate to 6.75%, citing more favourable inflation outturns, a persistently lower domestic risk premium, and a macroeconomic outlook broadly in line with its June forecast. The Council said June inflation and core inflation were below expectations and expects inflation to remain below the 3% target through 2027 before returning to target in H1 2028, adding that if favourable developments persist there is room for further summer rate cuts, with any continuation to be assessed in the September Inflation Report.