Central Bank leaves rates unchanged in October

Central Bank maintains tight monetary conditions: At its meeting on 21 October, the Hungarian National Bank (MNB) left the base rate unchanged at 6.50% for the thirteenth consecutive month, keeping interest rates at the joint-highest level in the EU, alongside Romania. The decision was in line with market expectations.

MNB balances inflation risks with economic growth outlook: The Bank resisted Prime Minister Orbán’s calls for interest rate cuts and held tight monetary conditions, as inflation persisted above the MNB’s 2.0–4.0% target range in September and household inflation expectations remained elevated. However, the forint’s strength so far this year and the Bank’s expectaction that inflation could return to target in early 2026 allowed the MNB to rule out a hike.

All panelists expect lower rates next year: The MNB’s forward guidance was unspecific and unchanged from last month. A vast majority of our panelists see the Central Bank standing pat through the end of 2025, with the rest penciling in a 25 basis point cut. In contrast, all of our panelists anticipate lower interest rates by the end of 2026, with cumulative cuts ranging from 25 to 225 basis points. The next meeting will take place on 18 November.

Panelist insight: On the outlook, Erste Group’s Orsolya Nyeste said: “We continue to think that the central bank is highly unlikely to touch interest rates in the first half of next year. We expect that the first easing steps may only be possible in the second half of 2026, potentially toward the end of the year. By then, we anticipate that the situation regarding price caps will be resolved, and the outlook for 2027 inflation will be clearer particularly whether inflation can sustainably remain within the central bank’s target range.”

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