A brief comment on recent MNB talk

HUNGARY - In Brief 28 Sep 2026 by Istvan Racz

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Last Tuesday (September 22), the Monetary Council halted its three-month long loosening 'mini-cycle', raised its inflation forecast for the next five quarters and reduced its medium-term inflation target to 2.5% from 3%, although the latter only from January 2028 (which matters very little in practice). On Friday (September 25), Vice Governor Kurali spoke on Reuters, under the title 'Hungary rate cut still possible this year if euro-plan gains traction, deputy governor says'. On Sunday, (September 27), MNB's YouTube channel put out a 28-minute inside interview with the same Mr. Kurali, even though the latter was recorded on Wednesday (September 23) already, as it was made clear during the discussion.Reading and listening to these appearances carefully, we have the impression that the messages of the two interviews were not entirely identical, so long as their emphasis was different. In the Reuters article, the emphasis was clearly determined by the title, even though a few lines below that, the condition for another base rate cut in the rest of 2026 was phrased as 'if external market conditions are favourable and the government presents a credible deficit-cutting plan to join the euro'. In the MNB podcast-interview, there was strictly speaking no word of any further base rate cuts in 2026, only the factors that will be looked at in the forthcoming period. And here, external conditions, with special mentioning of oil prices and then of major central banks' rate decisions, came first, and the content of the upcoming draft budget for 2027 and the medium-term macro framework that will have to go with it, came second, not as an order of importance but as an order of actual ...