BUDAPEST, June 23 (Xinhua) -- Hungary's central bank cut its base rate by 25 basis points to 6 percent on Tuesday, citing improved inflation prospects, easing geopolitical tensions and favorable developments in domestic financial markets.
The decision by the Monetary Council of the National Bank of Hungary marked the second rate cut this year, lowering the benchmark interest rate to its lowest level since 2022. The overnight deposit rate was reduced to 5 percent, while the overnight lending rate was lowered to 7 percent.
In a statement released after the meeting, the central bank said Hungary's inflation outlook had improved significantly since its previous forecast in March, supported by a stronger forint and lower energy and food prices.
The bank noted that easing tensions related to the recent Iran conflict had contributed to a more favorable global risk environment, while Hungary's risk premium remained low. It also cited the agreement between the Hungarian government and the European Commission on European Union funds as a factor supporting financial stability.
According to the central bank's latest forecast, annual inflation is expected to average 1.8 percent in 2026, 2.3 percent in 2027 and 3.0 percent in 2028, remaining below or close to the bank's 3 percent target.
The Monetary Council said that, provided favorable trends persist, there could be room for further rate cuts during the summer while maintaining positive real interest rates. ■