Analysts surveyed by Portfolio unanimously expected the Monetary Council of the Magyar Nemzeti Bank to hold its base interest rate at 5.5% at its upcoming Tuesday meeting while discussing updated macroeconomic forecasts and a potential review of its inflation target. The expected pause follows base rate cuts totaling 75 basis points during the summer.
Global pressures stall easing
The central bank initiated a mini rate-cutting cycle in June with a 25 basis point reduction, followed by further cuts in July and August. However, global crude oil prices rose above 100 USD due to Middle Eastern conflict, while developed central banks including the European Central Bank, the Federal Reserve, and the Bank of Japan recently hiked policy rates, narrowing domestic policy scope.
US 10-year Treasury yields crossed 5 percent. Nemeth David, senior analyst at K&H Bank, noted that alongside international developments and rate hikes, the council’s room for manoeuvre has narrowed. Trippon Mariann, macroeconomic analyst at CIB Bank, said higher and volatile energy prices reinforce upside inflation risks and push up major central bank rate paths, prompting policymakers to pause.
Target review and outlook
The survey showed a median expectation of a 25 basis point rate cut among analysts for the rest of the year. Balog-Beki Marta, analyst at MBH Bank, projected no further rate cuts before year-end as price increases could strengthen next year, while Nyeste Orsolya, expert at Erste Bank, said a 5 percent year-end rate still provides significant real interest.
The central bank projected average inflation of 1.8 percent for 2026, 2.3 percent for 2027, and 3 percent for 2028, alongside GDP growth of 2 percent this year and around 3 percent in the next two years. Rate setters are also discussing a potential review of the central inflation target midpoint, which could move from the current 3 percent to 2 percent.
Related: Economists see Turkish central bank holding rate at 37% · UOB sees Bank Indonesia holding rate in September
Source: Hungarian National Bank
