Basel, 12 May 2025 – The uncertain global geopolitical and trade situation entailed inflationary risks that required the Magyar Nemzeti Bank to reaffirm its commitment to maintaining a disciplined monetary policy, according to Mihály Varga, who attended the May meeting of the Bank for International Settlements (BIS) in Basel. The MNB’s Governor underlined that the price stability created by central banks was the driving force behind reducing uncertainty and fostering a predictable investment environment.
Governor Varga pointed out that the macroeconomic effects of the tariff war resulted in considerable uncertainty, undermining investment confidence and dampening international market sentiment. As he said, in order to mitigate risks, it was necessary to maintain economic and financial market stability, which in the long term could contribute to a pickup in investment and a decline in inflation. This was particularly true for small, emerging countries such as Hungary. Accordingly, the Magyar Nemzeti Bank was also supporting sustainable economic growth by ensuring stability, he added. Varga noted that in terms of domestic business prospects, there was reason for optimism as Hungarian fundamentals were strong and the country’s balance indicators had steadily improved in recent years. According to the latest data, inflation had dropped to 4.2 per cent in April, and this deceleration was expected to continue in the coming months. Nevertheless, the fight against inflation was not over, and he warned that the risks in the inflationary environment, paired with the trade and geopolitical tensions, meant that it was necessary to continue pursuing a cautious, patient monetary policy. Governor Varga emphasised that the central bank primarily contributed to maintaining financial market stability and anchoring inflation expectations, and thus to achieving the inflation target in a sustainable manner, by ensuring positive real interest rates.