No surprise at today's Monetary Council: the base rate remains at 6.25%

HUNGARY - In Brief 24 Mar 2026 by Istvan Racz

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The MNB base rate was kept unchanged at today's monthly rate-setting meeting, in line with expectation. For sure, we know that the pricing of forward contracts suggested that a rate increase was expected by the market, but the fact remains that analysts, including us, had been forecasting no change.The Council did not make any change to its new policy to sell FX directly for purposes of energy imports, as announced earlier this month, in response to most recent geopolitical events.The Council also discussed the Q1 inflation report on this occasion. They expect now 1.7% GDP growth this year, up from 0.4% in 2025, still led by private consumption, and 3% growth in 2027, given the expected entry of new industrial capacities in car and battery manufacturing. The latter would also turn the current account back to a small surplus by 2027, after the latter running temporarily into the red this year, because of the likely extra spending on energy imports.On inflation, the Bank now expects the 3% target level to be reached on a sustainable basis in H2 2027. One could say that yes, this is the usual 'normative' part of MNB inflation forecasts. We would say on this that given the extraordinary level of macro uncertainties at the moment, any forecasts, including ours as well, need to be handled with great caution. However, the Bank's short-term expectation that headline inflation will likely rise to 5-5.5%, and more to the upper end of that range, by Q3 this year appears to us pretty much realistic, given the global/European energy prices we see today:(The red line represents the Bank's current forecast, against the December 2025 forecast, indicated by the black line. An English t...