Hungarian Parliament building

Hungary Monetary Policy November 2023

Hungary: MNB cuts rates again in November

At its 21 November meeting, the Monetary Council of the Hungarian National Bank (MNB) cut its base rate to 11.50% from 12.25%, matching market expectations. Moreover, the Bank cut the overnight collateralized lending rate to 12.50% from 13.25%, while it reduced the overnight deposit rate to 10.50% from 11.25%.

The Bank’s decision to continue easing its policy stance was due to a further decline in inflation. The headline inflation rate decelerated to 9.9% in October from 12.2% in September, and the Bank expects it to reach around 7.0% by year-end thanks to tight monetary policy, lower commodity prices compared to last year and subdued domestic demand. It sees inflation averaging between 4.0–6.0% in 2024 and between 2.5–3.5% in 2025.

Looking ahead, the Bank stated that “a careful approach to monetary policy” is warranted due to risks surrounding global disinflation and international investor sentiment. The Bank added that future monetary policy decisions would take into account “incoming macroeconomic data, the outlook for inflation and developments in the risk environment”. Our panelists expect the Bank to cut rates further in 2024 amid easing inflation. The next monetary policy meeting is scheduled for 19 December.

Commenting on the release, Peter Virovacz and Frantisek Taborsky, economists at ING, stated:

“In general, the statement and the press conference did not bring any changes either in the tone of monetary policy or in the main functions that influence monetary policy decisions. As a result, today’s rate-setting meeting can be described as a well-managed non-event.”

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