Following the review of the inflation target, the Monetary Council decided to set the Bank’s medium-term inflation target at a 2.5 percent rise in the consumer price index as published by the Hungarian Central Statistical Office. The Council retains the symmetric, ±1 percentage point tolerance band around the inflation target. The 2.5 percent inflation target will come into effect over the monetary policy horizon, on 1 January 2028.
The decision makers reviewed, in detail, the factors affecting the appropriate level of inflation for the Hungarian economy and determined the medium-term inflation target accordingly. Following the multi-step target review initiated at the start of the year, the Monetary Council found that the key elements of the monetary policy framework were in line with international best practices; however, the level of the inflation target was higher than in the euro area or the region.
In the past decade, the level of real economic development and the price level has been approaching the euro area’s average. The state of nominal and real economic convergence supports lowering the inflation target. Further gradual price level convergence associated with continued real economic convergence may primarily take place in services. A 0.5 percentage point differential between the inflation targets of the ECB and the MNB provides room for the price level convergence to partially continue through this lower inflation surplus, and consequently to avoid placing an excessive burden on Hungary’s real economy in the short term. The decision brings the MNB’s inflation target in line with regional practices and closer to the ECB’s target.
Overall and in terms of trends, Hungary’s inflation developments and outlook are favourable. Inflation expectations declined significantly and are now around levels observed during the period of price stability. The lower inflation, the decrease in domestic risk premia, and the continued stability of the foreign exchange market support anchoring expectations at a lower level. Together, these factors provide a suitable environment for lowering the inflation target to 2.5 percent. The target-setting horizon provides a sufficient timeframe for economic agents to adjust to the new target.
In the long term, a lower inflation target means more moderate inflation, a more predictable economic environment, and lower nominal interest rates and financing costs for the Hungarian economy. This supports household consumption and investments, and as such contributes to ensuring sustainable economic growth. Lowering the inflation target also supports meeting the requirements for euro adoption.
During the target review, the Monetary Council evaluated the entire monetary policy framework and consequently its operative functioning as well. As a result, the Council decided to hold eight policy meetings per year from 2027 onwards. The change represents further alignment with international best practices and provides scope for more comprehensive assessments of underlying economic developments, thereby supporting effective monetary policy decision-making. In addition, the Council decided to hold eight non-policy meetings per year. The publication schedule of the Inflation Report remains unchanged.
MAGYAR NEMZETI BANK
Monetary Council
Budapest, 22 September 2026
The analysis outlining the background of the decision to lower the inflation target is accessible here.