FX.co ★ Hungary Keeps Base Rate Unchanged for a Year

The National Bank of Hungary has maintained its key interest rate at 6.50% for the eleventh consecutive session on September 23, meeting market expectations. The rates for overnight deposits and collateralized loans have also been held steady at 5.5% and 7.5%, respectively. Headline inflation stood at 4.3% in August, marking the second-highest rate in Central Europe and surpassing the central bank’s target tolerance band of 2–4%, which points to ongoing inflationary pressures. The Hungarian forint has reached its highest level in 15 months, benefiting from a larger interest rate differential after the recent rate cut by the US Federal Reserve, thus providing some easing for inflation. Despite this, government-implemented price caps and postponed price adjustments in the service sector might lead to a rebound in inflation post-elections, posing potential risks for 2026. Under the leadership of Governor Mihaly Varga, the National Bank of Hungary has taken a cautious and firmly restrictive approach, signaling a definitive shift away from a period of monetary easing.