Likely base rate cut in June, further major progress towards meeting conditions for EU funds

HUNGARY - Report 10 Jun 2026 by Istvan Racz

Our regular Rreaders are most probably fully aware that we have long been hesitating to join the rapidly increasing camp of macro analysts who predict an early reduction of the MNB base rate. However, yesterday's release of the CPI-inflation data for May has changed our view in this regard. Analysts expected a further small increase to 2.2% yoy, a one decimal point rise from April, largely in line with the MNB's standing forecast of a rising trend of the headline rate in the rest of 2026. However, the actual number was only 1.8% yoy, on zero inflation in May alone, and the core rate as well as the non-fuel inflation rate both fell to exactly 2% yoy, from April's 2.2% yoy and 2.4% yoy, respectively.

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