Hungarian central bank leaves key interest rate unchanged amid cautious outlook

The Magyar Nemzeti Bank announced that its base interest rate will stay at one outlet level, emphasizing caution due to global volatility and persistently high energy costs. Earlier this year, the bank had begun a short series of small rate reductions, but those cuts stopped after the third month as inflation forecasts did not warrant further easing. Although price growth has accelerated modestly, it still sits beneath the bank's defined target band.

The central bank assessed that recent domestic shocks—including a summer energy shortage, drought, and partial shutdown at the Paksi nuclear plant—will only minimally affect inflation. A rapid appreciation of the forint has also contributed to lower retail prices, a factor highlighted in the bank's analysis. Meanwhile, the government is preparing a new budget that targets a reduced deficit, a move that could shape the central bank's future stance on rates.