MNI NBH Preview - July 2025: Sticking to Caution

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Executive summary:

• The National Bank of Hungary is expected to keep its base rate on hold at 6.50% again this month, sticking to its ‘cautious and patient’ approach to monetary policy.
• Officials are likely to strike a hawkish tone and reiterate their commitment to achieving and maintaining price stability.
• However, some sell-side analysts expect an easing cycle to commence later in the year, dependent on both the forint and underlying inflation maintaining a more benign path.

Last month’s decision to keep the base rate unchanged at 6.50% was in line with expectations. The policy statement retained a cautious tone, reiterating that a “careful and patient” approach to monetary policy remains necessary, and was for the most part unchanged from May. Inflation is still expected to remain “above” the upper bound of the central bank’s tolerance band in the coming months, while the central bank acknowledged the downward effect of profit caps on consumer price growth. Consumer prices in Hungary rose a +4.6% Y/Y in June compared to +4.4% Y/Y in May, matching analysts' expectations and therefore limiting the scope for any significant changes to this month’s policy statement.