Hungarian Parliament building

Hungary Monetary Policy January 2024

Hungary: MNB cuts rates again in January

At its 30 January meeting, the Monetary Council of the Hungarian National Bank (MNB) cut its base rate to 10.00% from 10.75%, slightly less than the market had expected. Moreover, the Bank lowered the overnight collateralized lending rate to 11.00% from 11.75%, while it reduced the overnight deposit rate to 9.00% from 9.75%.

The Bank hiked less than the market had been expecting due to recent weakness in the forint. In the second half of January, the currency was one of the world’s worst performing amid government disputes with both the Bank and the European Union. That said, the Bank still decided to lower rates, rather than holding them steady, as inflation has continued to decline in recent months; moreover, it expects inflation to reach the upper bound of the 2.0–4.0% tolerance band in the spring thanks to still-tight monetary policy, a reduction in import prices compared to last year and subdued domestic demand.

Looking ahead, our panelists expect the Bank to cut rates further by the end of this year due to easing inflation. Prolonged forint weakness amid continued government disputes with the Central Bank and the EU is an upside risk. The next monetary policy meeting is scheduled for 27 February.

Commenting on the Bank’s decision, János Nagy, analyst at Erste Bank, stated:

“Today’s decision was a surprise after a really strong communication two weeks ago about a possible braver step. In January, MNB decided to remain cautious; besides, the door has been still left open to be more aggressive in February. We cannot exclude a higher step in the next month as for disinflation seems to run out of steam soon, there won’t be too much space for speed up. All-in-all, what could really be decisive is that to which extent the policy rate would further be reduced this year. This would primarily depend on the inflation outlook and monetary policy of major central banks.”

Meanwhile, analysts at ING stated:

“The National Bank of Hungary delivered a hawkish surprise at its January meeting and maintained its previous 75bp pace of easing. Going forward, data dependency will remain at the forefront as the focus stays fixed [on] both domestic and international developments.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest