Base rate remains unchanged

The committee last lowered interest rates by 25 basis points in September. Since the forint crisis at the end of 2022, the key interest rate has thus been halved.

MNB Vice President Barnabás Virág explained that investors are once again tending to avoid emerging markets, in parallel with a strengthening US dollar. Inflation is expected to be higher in 2025 than recently expected, and the MNB’s inflation target of 3% will not be reached in a stable manner until 2026 at the earliest. (Inflation could peak at 4.5% again after the turn of the year, but will fall below 4% from the middle of the year and close to 3% at the end of 2025). The economy will remain subdued in the current year (0.3-0.7%), but growth should pick up again next year to a dynamic 2.6-3.6%.

According to the central bank vice president, the key interest rate could remain anchored at the 6.5% level for some time. If the international interest rate cuts continue, this will improve the Hungarian position, which will give the forint more stability through the growing real interest rate advantage.