Hungary’s Central Bank Holds Interest Rate at 6.5%

The National Bank of Hungary kept its key interest rate at 6.5% in its January 2026 meeting, as expected by markets, to maintain the cutting cycle that ended in September of 2024. The unchanged monetary policy setting was despite its guidance change in the previous meeting, which dropped the rhetoric of ruling out rate cuts to signaling it will make decisions on a meeting-by-meeting basis. The latest data showed that inflation slowed to a 14-month low of 3.3% in December, close to the mid-point of the NBU's target range of 3%. Still, services inflation in the period soared to 6.8%, paring the outlook of imminent cuts for the central bank.

The National Bank of Hungary kept its key interest rate at 6.50%, extending its pause for a 15th straight meeting, in line with market expectations. This tied Romania for the highest level in the EU. Headline inflation fell to a 1-year low of 3.8%, entering the 3% ±1 percentage point target range for the first time in a year, aided by a stronger forint and the decline in global commodity and food prices. The bank trimmed its 2026 inflation forecast to 3.2% from 3.8% and lowered its GDP growth projection for the same year to 2.4% from 2.8%, citing a dual-speed economy, with robust private consumption offsetting weaker investment and net exports. Tightness in the labor market has moderated in recent quarters, though unemployment remains near historical lows. On the global front, economic growth has shown modest improvement, though lingering trade and geopolitical tensions pose risks. The MNB signaled that monetary easing could be considered if inflation and exchange rate dynamics permit.

The National Bank of Hungary kept its key interest rate at 6.50% for the 14th consecutive meeting on November 18, in line with market expectations. Acording to the central bank, ongoing trade and geopolitical tensions continue to create an uncertain global environment, and European growth outlook remains subdued. Also, rising supply chain fragmentation and high service price dynamics pose inflation risks. The ECB held rates steady, with no further cuts expected. In October, inflation stayed at 4.3%, while core inflation rose to 4.2%. Price restrictions helped reduce inflation, but high price indices persisted in sectors outside their scope. The forint has strengthened since early 2025, easing purchase prices, while corporate and household inflation expectations remain high, though slightly lower. The Monetary Council emphasized a cautious, but tight approach to monetary policy.