The Monetary Council of the National Bank of Hungary (MNB) decided to cut the central bank base rate by 25 basis points to 5.50% at a monthly policy meeting on Tuesday.
The Council also lowered the central bank's symmetric interest rate corridor by 25 basis points, bringing the O/N deposit rate to 4.50% and the O/N collateralized loan rate to 6.50%.
In a statement released after the meeting, the Council said inflation developments were below the baseline scenario projected in June, while the risk premium on domestic assets had remained stable.
"These factors have preserved the Monetary Council's room to maneuver," they added.
The Council noted that July inflation had slowed to 1.2%, below market expectations as well as the forecast in the central bank's June Inflation report. They added that CPI was set to stay under the 3% target for the rest of the year and throughout 2027 before returning to the target in H1 2028.
"Looking ahead, Hungary's risk assessment will be primarily influenced by expectations regarding the fiscal path and the adoption of the euro, as well as the external market environment," the Council said.
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