Press release on the Monetary Council meeting of 27 January 2026

27 January 2026

At its meeting on 27 January 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 28 January 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.

Prolonged trade and geopolitical tensions continue to pose a risk to the slightly improving global economic growth. Globally, inflation is moderating slowly, while the price dynamics in the euro area were close to the European Central Bank’s target during recent months.

Global risk indicators reacted sensitively to geopolitical and trade developments, while international oil and gas prices rose significantly. Based on market pricing, the Federal Reserve may reduce its target range for the federal funds rate two times in 2026. Markets expect the European Central Bank to keep the policy rate unchanged. Central banks in the CEE region left interest rates unchanged.

Hungary’s real economy can still be characterised by duality. According to the macroeconomic data received since the previous interest rate decision, retail sales continued to grow, while industrial and construction production decreased in November. The tightness of the labour market has eased gradually in recent quarters, while the unemployment rate remains low in a historical comparison.

From this year onwards, both internal and external factors contribute to the pick-up in growth. Due to rising real wages and the government’s income-increasing measures for households, consumption will support growth over the entire forecast horizon. At the same time, higher budgetary expenditure will make it more difficult to reduce the public debt-to-GDP ratio. In addition to the gradual recovery of Hungary’s export markets, the capacity-increasing investment projects of recent years also support the expansion of industrial exports. On an annual average, the current account surplus remains steadily around 2 percent of GDP.

In December 2025, inflation and core inflation fell to 3.3 percent and 3.8 percent, respectively. In 2025, average annual inflation was 4.4 percent. The decline in price dynamics can be primarily tied to a decrease in fuel and processed food inflation. Meanwhile, the extent of repricings was above the historical average in the case of market services and tradables. Over the course of the past half year, companies’ price expectations showed subdued dynamics overall. However, households’ inflation expectations stagnated.

The general improvement in the external cost environment and the pass-through of a stronger forint into purchase prices support disinflation. However, corporate repricings at the start of the year carry uncertainty regarding the inflation outlook. According to the MNB’s projection, the rate of price increases will briefly decline below the 3 percent inflation target in early 2026, before temporarily rising close to the tolerance band’s upper bound. The 3 percent inflation target may be achieved in a sustainable manner in 2027 H2. In the Monetary Council’s assessment, the inflation outlook is surrounded by balanced risks.

Monetary policy contributes to the maintenance of financial market stability, the anchoring of inflation expectations consistently with the central bank target and, as a result, to the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates. Maintaining the stability of the foreign exchange market is of key importance in reducing inflation expectations.

In line with the stability-oriented approach, the Monetary Council left the base rate unchanged at 6.50 percent at today’s meeting. The O/N deposit rate and the O/N lending rate also remained unchanged, at 5.50 percent and 7.50 percent, respectively.

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 risks to the inflation environment. In the Council’s assessment, maintaining tight monetary conditions is warranted. The Council is constantly assessing incoming macroeconomic data and factors influencing the inflation outlook, in particular repricings at the start of the year and the stability of financial markets, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner from meeting to meeting.

The abridged minutes of today’s Council meeting will be published at 2 p.m. on 11 February 2026.

MAGYAR NEMZETI BANK
Monetary Council