- Decision
- Maintain
- Rate change
- 0 bps
- base rate
- 5.5%
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.
Rate evolution
From May 2025 to October 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 holds in September and October. 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 meetings on 22 September and 20 October.