Press release on the Monetary Council meeting of 26 May 2026

26 May 2026

At its meeting on 26 May 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 27 May 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.

Geopolitical tensions have an adverse effect on the global outlook for inflation and growth. Global oil prices and European gas prices remain above their levels before the conflict in Iran, while risk premia on domestic assets have declined significantly since the March Inflation Report. The persistence of the improvement in risk perception is influenced, among others, by expectations related to EU funds, the fiscal outlook, and euro adoption.

The world’s leading central banks and central banks in the CEE region have kept interest rates unchanged in the past month. Interest rate expectations have shifted upward. For this year, markets price rising interest rates from the European Central Bank and central banks in the CEE region and unchanged interest rates from the Federal Reserve. Long-term yields in developed markets increased.

In 2026 Q1, Hungary’s economy grew by 1.7 percent year-on-year. In March, retail sales and industrial production both increased. The unemployment rate remains low in an international comparison.

Similarly to last year, the pick-up in domestic economic activity in 2026 is primarily driven by household consumption. Capacity-increasing investments in recent years support the expansion of industrial exports. The current account balance will temporarily decline this year before a gradual improvement.

In April 2026, consumer prices rose by 2.1 percent, while core inflation was 2.2 percent. Both figures were lower than the projection in the March Inflation Report, placing inflation near the lower bound of the tolerance band. Corporate price expectations rose but still indicate subdued dynamics. Household inflation expectations declined further.

Incoming data point to a more moderate inflation outlook. The stronger forint, as well as the postponed phaseout of regulated fuel prices and price margin caps moderate the rate of price increases. However, high global energy and commodity prices pose upside risks to inflation.

In the Council’s assessment, the inflation outlook has improved significantly. However, the uncertain global economic environment warrants a careful approach to monetary policy. Maintaining the stability of domestic financial markets, especially that of the foreign exchange market, is crucial in anchoring inflation expectations and thus achieving price stability. Uncertainty surrounding the inflation outlook may ease in light of incoming data and information on economic policy in the next period. All factors shaping the inflation trajectory will be comprehensively assessed in the June Inflation Report.

The Monetary Council left the base rate unchanged at 6.25 percent at today’s meeting. The O/N deposit rate and the O/N lending rate also remained unchanged, at 5.25 percent and 7.25 percent, respectively. The central bank will continue to ensure positive real interest rates in order to achieve the inflation target in a sustainable manner.

The Monetary Council is committed to the achievement of the inflation target in a sustainable manner. A careful and patient approach to monetary policy remains necessary due to inflation risks arising from geopolitical tensions. In the Council’s assessment, price stability can be achieved through tight monetary conditions. The Council is constantly assessing the impact of incoming macroeconomic data and financial market developments on the inflation outlook, as well as the persistence of the decrease in risk premia, 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 10 June 2026.

MAGYAR NEMZETI BANK

Monetary Council