The National Bank of Hungary’s Monetary Council held the base rate at 5.50%, saying unchanged interest rate conditions were necessary to achieve the inflation target sustainably amid high energy prices and an uncertain global outlook. The rate had fallen from 6.50% through 25-basis-point cuts in February and June–August. Effective 21 October 2026, overnight deposit and collateralised lending rates remain one percentage point below and above the base rate, respectively. Inflation stood at 1.6% in September and is projected to rise through the remainder of 2026 and in 2027, primarily because of higher fuel prices and tobacco excise changes, before declining to the 2.5% target by the end of the policy horizon. That target takes effect on 1 January 2028. Severe drought is slowing economic growth in 2026, partly offset by higher industrial exports, while real wage growth remains strong. Globally, geopolitical tensions are keeping oil and gas prices high, developed-market long-term yields have risen further and the US dollar has strengthened. The Council signalled cautious, data-driven decisions based on inflation, global developments and Hungary’s risk premia, emphasising positive real interest rates and foreign exchange market stability.
National Bank of Hungary Holds Base Rate at 5.50%
The National Bank of Hungary’s Monetary Council held the base rate at 5.50%, saying unchanged rates were needed to achieve the inflation target sustainably amid high energy prices and global uncertainty. It signalled cautious, data-driven decisions, emphasising positive real interest rates and foreign exchange market stability.