The Monetary Council of the Hungarian National Bank (MNB) has lowered the key interest rate by 25 basis points to 7%. The upper end of the interest rate corridor was changed from 8.25% to 8% and the lower end from 6.25% to 6%.
The central bank initiated interest rate cuts from the record high of 18% in May 2023. The smaller rate cut in June could lead directly to a stop in July. MNB has repeatedly signaled that the interest rate at the end of the year will not be much lower than at the end of the first half of the year.
According to the Monetary Council, the inflation outlook has improved in the last quarter. In addition, the accelerating growth of the Hungarian economy, the historically high foreign exchange reserves, the continuing improvement in the current account balance and the prudent monetary policy are helping to strengthen the country’s risk perception. At the same time, the volatile financial market environment, significant geopolitical tensions and risks to the inflation outlook continue to require a cautious and patient approach. Monetary policy will continue to help maintain financial market stability and achieve the inflation target in a sustainable manner by ensuring positive real interest rates.