Hungarian central bank holds base rate steady as mini-cut cycle continues

The Magyar Nemzeti Bank’s Monetary Council met on September 22 and chose to maintain the base interest rate, aligning with market forecasts. Governor Varga Mihály had earlier outlined a “mini” rate-cut cycle, consisting of small 0.25-point reductions, scheduled to conclude by September when the bank’s updated inflation report is published. Since the June announcement, the inflation picture has shown little change and the erosion of money value stays low, with recent data from the KSH indicating modest price growth.

Despite these domestic signs, the bank noted heightened external risks, including the escalation of conflict in the Middle East and higher policy rates among major central banks worldwide. Consequently, the MNB is proceeding cautiously, with analysts divided on whether further modest cuts may occur before year-end.