Rate Cut to 5.75% at the National Bank of Hungary
July 21, 2026
The National Bank of Hungary’s key interest rate today underwent its second 25-basis point reduction in a row. The decision, albeit not without some risk, was the expected one and accompanied by hint of yet another cut in August. The argument for monetary easing is that Hungarian consumer price inflation slowed further in June to 1.7%, which is lower than the MNB’s target range of 2-4% and down from a peal of 25.7% at the start of 2023. The interest rate back then had been jacked up as high as 13.0%. A series of cuts began in October 2023 that by September 2024 had halved the interest rate to 6.5%, but with inflation reversing from 3.0% in September 2024 to 5.6% in February 2025, no further rate changes had been made until June 2026. The danger surrounding rate normalization at this time in spite of sub-target CPI inflation is that the Middle Eastern war, while not discernibly lifting inflation in Hungary, has subjected the economy’s currency to downward pressure. Against the euro, the forint fell about 3.7% from 349.3 on June 16 to 362.9 on July 17. A weaker forint would magnify the latest upward pressure affecting world oil prices. Hungary’s lower central bank interest is out of step with what other central bank authorities are contemplating.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Magyar Nemzeti Bank
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