Hungarian central bank cuts the base rate again

At its meeting today, the Monetary Council of the National Bank of Hungary cut the base rate by 50 basis points to 7.25%.

During the one-year period of interest rate cuts, the policy rate fell from 18%, but the process may be coming to an end, or at least slowing down significantly.

Experts were expecting a half-percentage point cut, so the market was unsurprised. It is important to stress that a few unexpected events in the recent period have fundamentally impacted interest rate policy. Inflation has risen minimally in line with forecasts, the forint has strengthened amid improving global capital market sentiment, and financial market stability has not been challenged. In these circumstances, there was little reason for the MNB to deviate from its interest rate policy plan.

The central bank plans to continue to cut policy rates until mid-year, although not by the 100-75 basis points seen at the beginning of the easing period, but only by the 50 basis points seen in April.