Hungary: Central Bank leaves rates unchanged in December
Latest bank decision: At its meeting on 16 December, the Hungarian National Bank (MNB) decided to leave the base rate at 6.50% for the 15th consecutive month. Markets had expected the hold.
Inflation expectations remain high: While inflation fell within the 2.0–4.0% target range in November, the MNB kept rates unchanged in December amid still-elevated household inflation expectations. Despite weak growth in Q3, the Bank likely refrained from easing to preserve recent currency strength, which has played a central role in slowing disinflation.
MNB to cut rates in 2026: All our panelists expect interest rates to ease in 2026. Our Consensus is for the base rate to end the year at a five-year low. A weaker-than-expected domestic economy is a downside risk to the policy rate, while higher-than-expected inflation due to a stronger fiscal impulse next year is an upside risk. The MNB will reconvene on 27 January.
Panelist insight: ING analysts commented on the outlook:
“We believe that, if data and sentiment permit, a rate cut is likely in the not-too-distant future. It is too early to draw final conclusions, but it seems that we may need to revert to our previous forecast of 100bp of easing in total in 2026 (25bp each quarter) instead of a backloaded 50bp cycle.”