BUDAPEST, Feb. 24 (Xinhua) -- The Monetary Council of the National Bank of Hungary (MNB) on Tuesday cut the base rate by 25 basis points to 6.25 percent, the first adjustment since September 2024.
The central bank also reduced both ends of the interest rate corridor by the same margin. The overnight deposit rate was lowered to 5.25 percent, while the overnight lending rate was cut to 7.25 percent. The new rates will take effect on Feb. 25.
Speaking at a press conference following the rate-setting meeting, MNB Governor Mihaly Varga said the decision is supported by favorable inflation developments, but stressed that the move does not signal the start of a continuous easing cycle.
"The Monetary Council did not decide to launch a rate-cutting cycle today. We will continue to make decisions month by month based on incoming data, and we are not committing to a predetermined rate path," Varga said.
He noted that recent data aligned with the central bank's December forecast, which indicates improving underlying inflation trends and allows for a "cautious reduction" of the base rate.
Hungary's inflation fell to 2.1 percent in January, dropping below the central bank's target, while core inflation dropped under 3 percent. Varga said price growth may remain below target in the coming months before a temporary rise, adding that the inflation target is expected to be achieved sustainably in the second half of 2027.
Varga emphasized that strict monetary conditions remain necessary to ensure price stability, adding that the council will maintain a "cautious, patient and data-driven" approach, and asses the impact of each step before making further decisions.
The Hungarian forint remains stable following the announcement. The central bank's next rate-setting meeting is scheduled for March 24. ■