Published by Global Banking & Finance Review®
Posted on August 22, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleHungary's central bank maintains a 6.5% base rate amid high inflation, with potential rate cuts anticipated by year-end.
By Krisztina Than
BUDAPEST (Reuters) -Hungary's central bank is expected to leave its base rate steady at 6.5% for the 11th consecutive month on Tuesday despite a sputtering recovery, as inflation exceeds the bank's 2% to 4% tolerance band even though price growth slowed last month.
All 21 analysts surveyed between August 18 and 22 projected that the National Bank of Hungary would leave its base rate unchanged at 6.5% at its meeting. The median projection still sees a 25-basis-point rate cut by the end of this year, although analysts were divided over the room for policy easing.
"We still do not expect any rate cuts this year, as the Monetary Council remains focused on tackling persistently high inflation expectations," ING analyst Peter Virovacz said, adding that the only game changer would be if geopolitical tensions eased as the result of a ceasefire between Russia and Ukraine.
The bank's governor, Mihaly Varga, reiterated in a statement on Friday that with inflation risks still pointing upwards, the bank would "place special emphasis on cautious and patient monetary policy and an anchoring of inflation expectations".
The bank left its base rate on hold at 6.5% in July.
The NBH, which predicts average inflation at 4.7% this year, expects to reach its 3% inflation target only in early 2027, projecting mostly upside risks to inflation from tariffs, food and services, and downside risks to Hungary's economic growth, which it forecasts at a mere 0.8% this year.
Hungary's headline inflation slowed to 4.3% in July from 4.6% in June but exceeded analysts' median forecast for 4.1%, as energy and food prices stayed high. July core inflation slowed to 4.0% year-on-year from 4.4% in June.
"Although lower inflation argues for lower interest rates, heightened external uncertainties provide a reason for monetary policy caution. In our view, policy rates across the CEE-4 are likely to fall considerably further, but the timing and speed of rate cuts remain uncertain," Goldman Sachs analysts said in a note, projecting 50 bps easing for Hungary this year.
The bank also forecasts rate cuts in Poland and the Czech Republic before the end of the year.
"We expect that stronger exchange rates – combined with milder external inflationary forces – will weigh on inflation during the remainder of 2025 and into 2026," the analysts added.
(Reporting by Krisztina Than and Indradip Ghosh Editing by Gareth Jones)
Hungary's current base interest rate is 6.5%, which has been held steady for 11 consecutive months.
The National Bank of Hungary predicts average inflation at 4.7% this year, with expectations to reach a 3% target only by early 2027.
The Monetary Council is focused on tackling persistently high inflation expectations, which are influenced by external uncertainties and rising tariffs on food and services.
Analysts do not expect any rate cuts this year, although there are forecasts for potential rate cuts in Poland and the Czech Republic before the end of the year.
Hungary's headline inflation slowed to 4.3% in July from 4.6% in June, but it still exceeded analysts' median forecast of 4.1%.
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