Hungary holds base rate at 6.25% as cooling inflation and forint rally open the door to a June cut
Hungary's central bank left its base rate unchanged at 6.25% on Tuesday, May 26 — its lowest level in four years — while signalling that the door is opening to renewed easing as soon as June.
At a glance
- The MNB Monetary Council held Hungary's base rate at 6.25% at its May 26, 2026 meeting, effective May 27 — the lowest level in four years.
- April 2026 Hungarian inflation was 2.1% year-on-year with core inflation at 2.2%, both below the March Inflation Report projection and near the lower bound of the tolerance band.
- Governor Mihály Varga said the inflation outlook is favourable, supported by forint appreciation following the election of Péter Magyar as prime minister.
- Market pricing reflects three 25-basis-point rate cuts by end-2026 and another in 2027.
- The Council warned geopolitical tensions are keeping global oil and European gas prices above pre-Iran-conflict levels.
VERDICT — CONFIRMED
Hungary's central bank left its base rate unchanged at 6.25% on Tuesday, May 26 — its lowest level in four years — while signalling that the door is opening to renewed easing as soon as June. In its post-meeting statement, the Magyar Nemzeti Bank's Monetary Council said April consumer prices rose 2.1% year-on-year with core inflation at 2.2%, both lower than projected in the March Inflation Report and near the lower bound of the bank's tolerance band.
The Council said price stability can be achieved through tight monetary conditions and that base-rate decisions will be taken in a 'cautious and data-driven manner,' while warning that geopolitical tensions are keeping global oil prices and European gas prices above their levels before the conflict in Iran. Governor Mihály Varga said the inflation outlook is favourable, supported by the recent appreciation of the forint following the election of Péter Magyar as prime minister.
Reuters later reported the decision was backed by 10 policymakers, with one, Péter Gottfried, voting for a 25-basis-point cut. Bloomberg reported markets are pricing three 25-basis-point cuts by end-2026 and another in 2027, and OTP analysts called the statement a shift in tone that could pave the way for a June move.
Why it matters
with the Fed and ECB tilting hawkish on Hormuz-driven inflation, Hungary is among the first central banks positioning to ease — a divergence trade for EM rates and the forint.
Key facts on file
- The MNB Monetary Council held Hungary's base rate at 6.25% at its May 26, 2026 meeting, effective May 27 — the lowest level in four years.
- April 2026 Hungarian inflation was 2.1% year-on-year with core inflation at 2.2%, both below the March Inflation Report projection and near the lower bound of the tolerance band.
- Governor Mihály Varga said the inflation outlook is favourable, supported by forint appreciation following the election of Péter Magyar as prime minister.
- Market pricing reflects three 25-basis-point rate cuts by end-2026 and another in 2027.
- The Council warned geopolitical tensions are keeping global oil and European gas prices above pre-Iran-conflict levels.
