The council also left the O/N deposit rate at 5.5% and the O/N collateralised loan rate at 7.5%. The rates mark the ends of the central bank’s symmetric interest rate corridor.
At a press conference after the meeting, Mihály Varga, the new central bank governor, said tight monetary conditions were warranted, adding that a “careful” and “patient” approach to monetary policy was necessary. He said the inflation path in 2025 was likely to be higher than earlier expected and achieving the 3% inflation target had been delayed. He also pointed to upside risks to inflation as well as trade policy and geopolitical tensions.
Varga said that restrictive monetary policy contributed to the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates. He added that the base rate could remain at its current level for “an extended period”.
He said headline CPI would fall back into the MNB’s 3% +/-1pp tolerance band at the beginning of 2026 and approach the 3% target by year-end. In its fresh quarterly Inflation Report, discussed at the policy meeting on Tuesday, MNB put average annual inflation at 4.5%–5.1% in 2025 and at 2.9%–3.9% in 2026.
The central bank forecast GDP growth of 1.9%-2.9% in 2025 and 3.7%-4.7% in 2026 in the report. Varga said expanding consumption could be the engine of growth in 2025, supported by real wage growth and tax cuts. Big investments in industrial capacity started in recent years could start operating at the end of 2025 or in 2026, he added. He said external demand was set to remain weak in the short term, but a pickup in Europe could boost Hungary’s exports in the mid-term.
Fielding questions, Varga said the council had discussed just one option and members had supported the decision to keep the base rate on hold unanimously. He said a government-mandated cap on markups of some basic food products could shave 0.8 percentage point off headline inflation.
He added that inflation had peaked in February and would start to fall in March. Addressing the matter of the central bank’s foundations, Varga said the MNB’s new management aimed to cease or scale back activities that diverged from its primary tasks.
“It is my belief that these types of activities are not necessary for the central bank in the long term,” he added. Varga said the foundations’ operation would be reviewed and rationalized.
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