The Monetary Council of the Magyar Nemzeti Bank held its base rate at 5.50 percent on Tuesday following a series of interest rate cuts conducted over the summer, while lowering its inflation target and reducing the frequency of its rate-setting meetings.
Framework changes
The central bank announced a cut in the inflation target to 2.5 percent starting on 1 January 2028, down from the previous target of 3 percent, bringing it closer to the 2 percent target maintained by the European Central Bank. Policymakers also altered their operational calendar, cutting the number of annual rate-setting meetings from 12 to 8 beginning in 2027.
The rate hold and the reduction in the inflation target had both been flagged in an earlier report by Bloomberg. The Council voted unanimously on the new target.
Economic projections
The central bank projected GDP growth at 1.8 percent for 2026, followed by 2.9 percent in 2027 and 2.8 percent in 2028, while forecasting inflation of 1.8 percent for 2026. The Hungarian forint strengthened following the announcement.
Governor Mihaly Varga addressed inquiries regarding an investigation into a leak, stating that officials identified the group of individuals where the leak could have occurred, but declined to provide further details.
Source: Hungarian National Bank | Data: European Central Bank
