Central Bank Interest Rate Changes in Kyrgyzstan and Hungary But in Opposite Directions
February 24, 2026
The National Bank of Krygyzstan’s policy interest rate was hiked late yesterday by another full percentage point and now becomes 12.0%, its highest level since April 2024. That was the fourth increase since April 2024, bringing the cumulative climb since then to three full percentage points. CPI inflation in the economy exceeds the 5-7% target by more than two percentage points now, and officials worry about the inflationary repercussions of geopolitical strains and tariff warfare.
In Hungary, by contrast, headline consumer price inflation dropped over a percentage point in January to 2.1%, a 94-month low and near the floor of the 2-4% central bank target corridor. Inflation had been as high as 25.7% in early 2023, prompting officials at the Hungarian National Bank to lift their key interest rate as high as 13.0%. By September 2024, inflation had dropped to the target mid-point of 3.0%. During that disinflationary period, the central bank interest was halved to 6.5%. A pause in rate cutting then ensued as inflation rebounded to 5.6% by early 2025, and no rate changes were made last year. But with inflation dropping from 3.3% in December to 2.1% last month and core inflation slowing signicantly as well to a 7-year low of 2.7%, officials today agreed to an additional 25-basis point cut to 6.25%, the benchmark’s lowest level since June of 2022. A statement explaining today’s decision and providing some forward guidance on the future has this to say:
The general improvement in the external cost environment and the pass-through of a stronger forint into purchase prices support disinflation. According to the MNB’s forecast, the rate of price increases will remain below the 3 percent inflation target in the coming months, before temporarily rising close to the tolerance band’s upper bound. According to the December Inflation Report, the 3 percent inflation target may be achieved in a sustainable manner in 2027 H2.
favourable developments in underlying inflation and the stability of financial markets allowed for a cautious reduction in interest rates. The central bank will continue to ensure positive real interest rates in order to achieve the inflation target in a sustainable manner.
Copyright 2026, Larry Greenberg. All rights reserved.
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