Hungary cenbank leaves rates on hold in July too
The last time the Monetary Council of the MNB cut the base rate was last September, and it was expected that the easing would not be continued now, as inflation rose to 4.6% in June. This was largely why analysts were unanimous in expecting the rate to be kept on hold at today's meeting, and in the end
these expectations were confirmed.
Most experts now expect that there could be room for some interest rate cuts in late 2025 or early 2026, after which the expected removal of the margin freeze could bring another jump in inflation. It is therefore possible that the base rate will still be around the current level at the end of 2026.
The lower-than-expected economic performance may justify a rate cut, but in recent months the central bank's leadership has struck a very firm tone. Among other things, it has been stressed that maintaining the current interest rate conditions could be justified on a sustained basis and that easing should not be considered until the inflation target range ( +3% to -1%) is sustainably reduced.
In other words, the 6.5% base rate is expected to remain in place in the coming months, which could be positive for the forint. In the first half of this year, the Hungarian currency has performed exceptionally well, largely thanks to high Hungarian interest rates.
Following the decision, the MNB will issue its usual statement at 3 p.m., and Governor Mihály Varga will hold a press conference, on which Portfolio will report live.
Cover photo (for illustration purposes only): Portfolio
