Central Bank leaves rates unchanged in October

Bank holds, as expected: At its meeting on 22 October, the Monetary Council of the National Bank of Hungary (MNB) decided to leave all interest rates unchanged, with the base rate remaining at 6.50%. The decision followed September’s rate cut and was in line with market expectations.

Forint’s depreciation drives decision: The hold was largely motivated by the recent depreciation of the forint—amid rising risk aversion towards emerging markets—and the Bank’s expectations of inflation volatility until year-end. Sluggish disinflation in the services sector and rising inflation expectations among households were additional factors behind the Bank’s decision. This came despite inflation hitting the Central Bank’s 3.0% target in September for the first time in nearly four years.

MNB signals a pause in rate cuts: In its forward guidance, the MNB struck a hawkish tone, stating that “re-intensifying geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warrant a pause in cutting interest rates”. That said, our panelists see room for one additional 25 basis point cut by year-end and more in 2025. The MNB will reconvene on 5 November.

Panelist insight: ING analysts Peter Virovacz and Frantisek Taborsky commented on the outlook for the forint and the MNB’s future decisions: “Overall, it is difficult to expect a quick recovery of the HUF in the near future, given the risk-off sentiment in the markets ahead of the US elections. At the same time, it is easier to see further weakness than strength at the moment, but in the medium term the HUF has support in interest rates if the global story allows it. […] The market is not expecting much now from the [MNB], with the first rate cut targeted for March next year and roughly two to three rate cuts in total.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Hungarian interest rate projections for the next ten years from a panel of 25 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Hungarian interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Hungarian interest rate projections.

Want to get access to the full dataset of Hungarian interest rate forecasts? Send an email to info@focus-economics.com.