Hungarian Parliament building

Hungary Monetary Policy May 2024

Hungary: Central Bank decreases rates in May

At its meeting on 21 May, the Central Bank decided to reduce its base rate by 50 basis points to 7.25% and accordingly adjusted the O/N deposit rate to 6.25% and the O/N collateralized lending rate to 8.25%.

The key domestic factors influencing the Central Bank’s decision included inflation, which remained within the Bank’s 3.0–5.0% tolerance band at an annual rate of 3.7% in April, and core inflation, which saw a further decline in the same month. These inflation dynamics drove the Central Bank’s decision on interest rates.

The Central Bank provided no explicit forward guidance on future interest rate movements but indicated that it would adopt a careful and patient approach to monetary policy, taking into account global and domestic disinflationary risks and volatility in international investor sentiment. It stated that any further decisions on reducing the base rate would be made cautiously and based on incoming macroeconomic data and the inflation outlook. Our panelists forecast a further decline in interest rates by the end of this year.

The next monetary policy meeting is scheduled for 18 June.

Commenting on the release, analysts at ING stated:

“The National Bank of Hungary repeated its previous decision, cutting the main interest rates by 50bp. The outlook for monetary policy after June remains clouded, although the cautious and patient approach suggests a narrow margin of manoeuvre.”

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