The Magyar Nemzeti Bank cut its base rate by 25 basis points to 5.75% on Tuesday, its second consecutive cut after a 25 basis-point reduction in June. The reduction, decided by the Monetary Council, was in line with market expectations and takes effect from 22 July 2026.
The O/N deposit rate and the O/N collateralised lending rate were also cut by 25 basis points, to 4.75% and 6.75% respectively. The Monetary Council said inflation had fallen to 1.7% in June, below expectations, and that it saw room to lower the base rate further during the summer if favourable developments persisted.
CORRIDOR MOVES WITH BASE RATE
The overnight deposit and overnight lending rates that define the boundaries of the central bank's interest-rate corridor were shifted alongside the base rate, keeping their spread to the benchmark unchanged.
The Council said inflation developments had been more favourable than projected in June and that the lower risk premium on domestic assets had persisted, preserving its room to manoeuvre. It added that maintaining the stability of domestic financial markets, especially the foreign exchange market, anchors inflation expectations and contributes to price stability.
The MNB published the new interest rate conditions, effective from 22 July 2026, on its website.
MARKET EXPECTATIONS MET
The move was in line with market expectations. Investors had expected a further cut after the Council signalled in June that it saw room for more reductions over the summer.
The decision brings the base rate to 5.75%, down from 6.00% before the meeting. The Council said it would maintain a positive real interest rate.
The Council said a decision on continuing the cuts would be made based on the September Inflation Report.
The abridged minutes of the meeting were scheduled for publication on 5 August 2026.