Central banks must cooperate to strengthen global financial stability

Basel, 29 June 2025 – Mounting international uncertainties had negatively impacted the economic environment in Europe as well as global growth prospects, said Mihály Varga, speaking at the annual conference of the Bank for International Settlements (BIS) in Basel. The MNB Governor underlined that the primary objectives of the Magyar Nemzeti Bank continued to be achieving and maintaining price stability, and that international monetary policy cooperation was crucial in this regard in the current turbulent period.

Varga pointed out that escalation of the conflict in the Middle East, and the US administration’s tariffs and the countermeasures applied worldwide were generating considerable uncertainty in the macroeconomic outlook. The global economic effects also impacted Hungary, and the country’s growth prospects remained uncertain due to trade and geopolitical tensions, which could give rise to renewed inflationary pressures. He noted that the Magyar Nemzeti Bank expected the Hungarian economy’s performance to pick up gradually in the second half of the year, and accordingly Hungarian GDP may expand by 0.8 percent in 2025. The Hungarian economy was then expected to return to more dynamic growth from next year, with the central bank projecting GDP growth of 2.8 percent in 2026 and 3.2 percent in 2027. Commenting on inflation expectations, the Governor said that the central bank anticipated that inflation would sustainably reach the 3-percent target in 2027, and thus monetary policy had to remain prudent and patient. In Varga’s opinion, as sustainable, low inflation not only served Hungarian interests but also created the necessary leeway to efficiently manage adverse international developments, central banks needed to be vigilant and cooperate to manage cross-border effects.

After the BIS annual conference, the MNB’s Governor held bilateral talks with Taleh Kazimov, Governor of the Azeri central bank. The parties expressed their intention to strengthen the relationship between the two institutions in the areas of knowledge sharing among specialists, technical assistance and financial digitalisation. After the three-day conference, Varga will travel to Sintra, Portugal, to participate in the annual conference of the European Central Bank.

Magyar Nemzeti Bank