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The rates mark either end of the central bank’s symmetric interest rate corridor. It was the first cut of the key rate by policymakers since February.
According to the state news agency MTI, the council said in a statement released after the meeting that the inflation outlook has improved significantly. The MNB said that based on its June forecast, Hungary’s GDP will rise by 2% in 2026, 3% in 2027, and 2.9% in 2028.
At a press conference after the meeting, governor Mihály Varga said that, based on the MNB’s June Inflation Report, the inflation path had shifted downward significantly compared to the March report. He predicted lower annual inflation rates of 1.8% this year, 2.3% in 2027, and 3% in 2028.
Varga noted that even if the government immediately withdrew the markup cap scheme, inflation would still not rise above the central bank’s 3% target and would not endanger price stability. The governor also noted the combined effects in reducing inflation of the forint’s strengthening against the euro, falling energy prices, and an end to an 18-month global cycle of rising food prices.
Varga admitted that the decision to cut the base rate had not been unanimous, but had been supported by “the overwhelming.” He adde d that the base rate could be reduced by 25 bp every summer month from here, followed by a review in September.
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