Press release on the Monetary Council meeting of 25 August 2026

25 August 2026

At its meeting on 25 August 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 26 August 2026:

The primary objective of the Magyar Nemzeti Bank (MNB) is to achieve and maintain price stability. 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 by geopolitical developments in the Middle East and the uncertainty around the resolution of the conflict. Global oil prices have remained broadly unchanged, while European gas prices have risen in recent weeks.

In July, the European Central Bank and the Federal Reserve kept policy rates unchanged. Markets price in a slightly rising interest rate path from both central banks by the end of the year. Looking ahead, the Bank of Japan is expected to raise the policy rate. In the CEE region, the Czech and Romanian central banks decided to keep policy rates unchanged in August. Long-term yields in developed markets remain high in a historical comparison.

Based on preliminary data, Hungary’s GDP grew by 1.7 percent in Q2 in annual terms. The growth of gross domestic product was supported by the performance of services and industry, while it was held back by agriculture. The unemployment rate remains low in an international comparison. Overall, the macroeconomic outlook is in line with the June projection. However, the expansion of industrial production may be faster than previously anticipated, while the performance of agriculture may be more subdued due to the drought.

In July, inflation eased to 1.2 percent, which was below expectations and the projection in the June Inflation Report. Core inflation decreased to 1.9 percent. The inflation of food and tradables declined, while the annual price index of market services increased. Price increase in market services on a monthly basis was largely related to the repricings in the banking and telecommunications sectors following voluntary price restrictions. Households’ inflation expectations are below the level seen at the beginning of the year. Companies’ price expectations for retail sales and services declined compared to the previous month. The rate of price increases will remain below the central bank’s 3 percent target for the rest of the year and throughout next year before returning to the target in 2028 H1.

Inflation developments were below the baseline scenario projected in June, while the risk premium on domestic assets has remained stable. These factors have preserved the Monetary Council’s room to manoeuvre. 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.

The Monetary Council reduced the base rate by 25 basis points to 5.50 percent at today’s meeting. The O/N deposit rate and the O/N lending rate decreased to 4.50 percent and 6.50 percent, respectively.

The Monetary Council is committed to achieving the inflation target in a sustainable manner and constantly assesses the inflation outlook, global developments, and Hungary’s risk premium. While ensuring a positive real interest rate, maintaining the stability of financial markets, especially that of the foreign exchange market, supports the anchoring of inflation expectations and thus contributes to the achievement of price stability.

The Council will decide on the future path of the base rate based on the September Inflation Report.

The abridged minutes of today’s Council meeting will be published at 2 p.m. on 9 September 2026.

MAGYAR NEMZETI BANK
Monetary Council