Hungary: MNB Cuts by 25bp to +5.75%, Maintains Guidance for Further Cut Next Month

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Hungary: MNB Cuts by 25bp to +5.75%, Maintains Guidance for Further Cut Next Month

Economics Research

21 July 2026 | 6:00PM BST

Hungary: MNB Cuts by 25bp to +5.75%, Maintains Guidance for Further

Cut Next Month

Bottom Line: The MNB cut its policy rate by 25bp to +5.75%, in line with our Kevin Daly

+44(20)7774-5908 | kevin.daly@gs.com

forecast and consensus expectations. The accompanying press release highlighted Goldman Sachs International

that “inflation developments were more favourable than the baseline scenario projected in Johan Allen

June” and that “the lower risk premium on domestic assets persisted”, which is primarily a +44(20)7774-7122johan.allen@gs.com |

reference to the underlying strength of the HUF. Together, these factors “have Goldman Sachs International

preserved the Monetary Council’s room to manoeuvre” – despite renewed tensions in the

Middle East. The MNB did highlight geopolitical developments, but these were

framed more as a driver of global risk sentiment and as a risk factor for Hungary’s

macroeconomic outlook. They also highlighted expectations regarding the adoption

of the Euro and the fiscal path as other determinants of Hungary’s risk assessment.

Policy Outlook: Similar to the June meeting, the Monetary Council continued to

strike an explicitly dovish stance in the press release, stating that “if favourable

developments persist, the Council – while maintaining a positive real interest rate – sees

room to further decrease the base rate throughout the summer, with a decision on the

continuation to be made based on the September Inflation Report”. This would imply that

a cut in August is still probable and that the MPC is likely to continue its cutting cycle

assuming the outlook does not deteriorate. Governor Varga provided similarly dovish