Basel, 26 June 2026 – “As the geopolitical conflicts shaping the global economy also impact the financial outlook, central banks must insist on maintaining stability,” said MNB Governor Mihály Varga, who is attending the annual general meeting of the Bank for International Settlements (BIS). According to Varga, the global risk environment had become more favourable as international tensions eased, expanding the leeway for monetary policy in Hungary.
Governor Varga highlighted that according to the latest data the domestic inflation outlook was expected to improve significantly by June, while global risks affecting Hungary had diminished. He added that taking this into consideration the Monetary Council had reduced the base rate to 6 percent in June and saw room for further interest rate cuts in the summer. Varga pointed out that with regard to stability it was important that the Monetary Council was committed to achieving price stability going forward and explained that the Council was assessing the evolution of the inflation outlook and global developments on an ongoing basis. He also noted that in assessing the trends one could already foresee that inflation would be around the lower boundary of the central bank’s tolerance band for the rest of the year. Moreover, the appreciation of the forint exchange rate in recent months would affect the evolution of consumer prices both this year and next year. Governor Varga also pointed out that, in addition to the above, the unwinding of tensions in the Iran conflict had resulted in market fuel prices falling below the regulated threshold. Thus, average annual inflation was forecast to be 1.8 percent this year and 2.3 percent next year. He underlined that the MNB’s careful, patient approach was validated by market stability and the sharp decline in inflation expectations.
Magyar Nemzeti Bank