Central Bank leaves rates unchanged in November

Rates remain EU’s joint-highest: At its meeting on 18 November, the Central Bank (MNB) decided to leave its base rate unchanged at 6.50%—the EU’s joint-highest policy rate level. The MNB has been standing pat since September 2024.

Bank remains on hold amid high inflation and weak economy: The MNB ruled out a rate cut as inflation remained above the Bank’s 2.0–4.0% target in October for the 11th consecutive month and domestic demand is expected to pick up due to fiscal stimulus, increasing inflationary pressures. Meanwhile, the Bank couldn’t tighten its policy stance as the economy continued to languish in Q3. Instead, the MNB anticipates a stronger forint to help curb price pressures.

Rates to ease by end-2026: A majority of panelists expect the MNB to remain on hold at its final meeting of 2025 on 16 December, while a minority see a 25 basis point cut. Looking further ahead, all our panelists expect interest rates to ease, with the spread ranging between 25 and 225 basis points. 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.

Panelist insight: ING analysts commented: “The risk of earlier cuts is increasing given the state of the Hungarian economy and rate cuts elsewhere, such as in Poland and the US. Therefore we see scope for the short end of the curve to decline, while the long end should remain under pressure from fiscal headlines, likely resulting in further steepening.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Hungarian interest rate projections for the next ten years from a panel of 26 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Hungarian interest rate.

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