Press release on the Monetary Council meeting of 22 September 2026

22 September 2026

At its meeting on 22 September 2026, the Monetary Council reviewed the latest economic and financial developments and decided on the following structure of central bank interest rates with effect from 23 September 2026:

The primary objective of the Magyar Nemzeti Bank (MNB) is to achieve and maintain price stability. From 1 January 2028, the inflation target will be set at 2.5 percent; the MNB will publish a separate press release and analysis about the background of the decision. Without prejudice to its primary objective, the MNB preserves financial stability and supports the Government’s economic policy, as well as its policy on environmental sustainability.

Global investor sentiment continues to be shaped primarily by geopolitical developments and risks related to the sustainability of the debt paths of developed markets. Global oil and European gas prices increased in recent weeks.

In September, the European Central Bank, the Federal Reserve and the Bank of Japan raised policy rates by 25 basis points. Based on market pricing, all three central banks are expected to increase policy rates further. In the CEE region, the Czech and Polish central banks decided to keep policy rates unchanged in September. Long-term yields in developed markets remain high in a historical comparison.

The services sector and industrial production contributed the most to Hungary’s 1.7 percent GDP growth in 2026 Q2, while agriculture restrained it. In July, the volume of retail sales and industrial production both increased. The unemployment rate remains low in an international comparison, and real wage growth is strong.

Agricultural output, which declined due to severe drought, is slowing this year’s economic growth; this is partly offset by higher industrial exports. Based on the September projection, Hungary’s GDP will rise by 1.8 percent in 2026, 2.9 percent in 2027, and 2.8 percent in 2028. The current account balance will be close to equilibrium this year, before showing a slight surplus in 2027 and 2028.

Standing at 1.3 percent, inflation in August was below analysts’ expectations and the projection in the June Inflation Report. Core inflation was 2 percent. Food inflation declined, while the annual price index of tradables and market services increased. The month-on-month increase in consumer prices can be viewed as a partial correction of the price decline seen in July; viewed over a period of several months, price changes remain moderate. Households’ inflation expectations and companies’ price expectations for retail sales and services declined compared to the beginning of the year.

Compared to the June Inflation Report, the inflation rate in the September projection did not change for this year while shifting upwards for 2027. The faster-than-expected pass-through of the appreciation of the forint observed in the spring months is offset by higher fuel prices in 2026. Next year’s inflation forecast is raised due to the effects stemming from the increase in energy prices and the modification of the excise duty on tobacco products. The rate of price increases will be 1.8 percent this year and 3.1 percent in 2027. Inflation will decline to the central bank’s 2.5 percent target by the end of the monetary policy horizon.

Based on the Monetary Council’s risk assessment, the baseline scenario in the September projection is surrounded by balanced risks to both inflation and growth. The risk scenarios highlighted by the Council presume persistently rising energy and food prices due to geopolitical tensions and climate change, persistently high wage dynamics and services inflation, lower domestic risk premium, and a slower-than-expected recovery in the international economy.

Although inflation is below the central bank’s target, high energy prices, as well as the uncertain global economic and financial market environments warrant a careful approach to monetary policy. Looking ahead, Hungary’s risk assessment will be primarily influenced by expectations regarding the fiscal path and the adoption of the euro, as well as the external market environment.

In the Monetary Council’s assessment, maintaining the current interest rate conditions is necessary to achieve the inflation target in a sustainable manner. The Monetary Council kept the base rate unchanged at 5.50 percent at today’s meeting. The O/N deposit rate and the O/N lending rate also remained unchanged at 4.50 percent and 6.50 percent, respectively.

The Monetary Council is committed to achieving the inflation target in a sustainable manner. In addition to ensuring positive real interest rates, maintaining the stability of financial markets, especially that of the foreign exchange market, supports the anchoring of inflation expectations and thus contributes to achieving price stability. The Council is constantly assessing the inflation outlook, global developments, and Hungary’s risk premium, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner.

The abridged minutes of today’s Council meeting will be published at 2 p.m. on 7 October 2026.

MAGYAR NEMZETI BANK
Monetary Council