MNI NBH Preview - Jun'25: Rates, Guidance Expected Unchanged

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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.
• Comments from central bank officials continue to indicate that it is unlikely that any changes will be made to the Bank’s hawkish guidance either, with officials committed to achieving and maintaining price stability amid an uncertain geopolitical backdrop.
• Among sell-side, views remain mixed over whether an easing cycle will commence before year-end. 

Minutes from the NBH’s previous rate-setting meeting shed light on the internal decision making at the central bank. “Council members agreed that changing the forward guidance was not warranted” due to “risks surrounding the inflation environment as well as trade policy and geopolitical tensions.” Given we have not seen notable improvements on either front – the Israel/Iran conflict has only heightened geopolitical uncertainty while the outcome of trade negotiations with the Trump administration remains unclear – policymakers are likely to arrive at the same conclusion again this month. In practice, this will mean no change to the “careful and patient” and “maintaining tight monetary conditions is warranted” guidance, while the statement is likely to add mention to an increase in oil prices as well.