The National Bank of Hungary cut its base rate by 25 basis points to 5.75% at its July 2026 meeting, in line with market expectations and continuing its monetary easing cycle. The move followed a decline in annual inflation to 1.7% in June from 1.8% in May, keeping price growth below the central bank’s 2%–4% target range for a second consecutive month and creating additional room for policy loosening.
Governor Mihály Varga signaled that one further rate cut is likely over the summer, after which the bank will reassess its policy stance in September in light of updated macroeconomic projections. However, the forint has depreciated by nearly 2% against the euro since the previous meeting, amid renewed geopolitical tensions in the Middle East. This currency weakness raises upside risks to inflation by pushing up the cost of energy imports.