MNB Monetary Council Leaves Base Rate Unchanged

At its meeting on this Tuesday, the Monetary Council of the National Bank of Hungary (MNB) reviewed the latest economic and financial developments and decided not to change the central bank interest rates, leaving its base rate at 6.5%.

According to the press release after the meeting, the primary objective of the National Bank of Hungary is to achieve and maintain price stability. Without prejudice to its primary objective, the National Bank of Hungary preserves financial stability and supports the government’s economic policy, as well as its policy on environmental sustainability.

Ongoing trade and geopolitical tensions continue to create an uncertain global economic environment. The conditions of the concluded and envisaged tariff agreements and their expected real economic effects vary greatly by region. The expenditure-increasing programs announced in the European Union and those approved in the United States could stimulate growth from the next year onwards.

Inflation decreased in most countries in 2025 H1. However, price dynamics accelerated slightly in 2025 Q2. Looking ahead, the upward effect of tariffs on inflation expectations, further rises in global food prices, as well as continued high price dynamics in market services pose upside risks to inflation. The volatility of energy prices decreased since the previous interest rate decision.

Risk appetite in international financial markets is mainly influenced by tariff announcements and developments related to geopolitical conflicts. There was a rise in major stock market indices and US long-term yields. The Federal Reserve’s expected interest rate path shifted slightly upwards, with markets pricing in two 25 basis point rate cuts this year. In the case of the European Central Bank, markets continue to price in a single 25 basis point interest rate cut until the end of the year. Over the past month, among the regional central banks, the Polish central bank cut interest rates by 25 basis points while the Czech and Romanian central banks kept interest rates unchanged.

In 2025 Q1, Hungarian economy stagnated. In parallel with the stable growth in household consumption, the decline in investment is prolonged, while the export of tradables is generally constrained by the uncertain global environment. High-frequency data for the second quarter continue to indicate subdued performance. In May, retail sales and construction increased slightly, while industrial production decreased compared to the same period of the previous year. In the second half of the year, stable growth in consumption and normalizing external demand point to the gradual recovery of economic growth. The unemployment rate remains low, however, the rate of wage growth slowed in May, the statement says.