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.
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% in September, with the overnight deposit and collateralised loan rates remaining at 4.50% and 6.50%, respectively. It lowered the medium-term inflation target to 2.5% from 1 January 2028, retaining a symmetric ±1 percentage point tolerance band, and reiterated a cautious, data-dependent policy stance.