MNI NBH Review - April 2025: Rates Held, Tariff Risk Noted

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Executive summary:

• The National Bank of Hungary decided to keep its base rate unchanged at 6.50%, maintaining a hawkish tilt to its communication despite the slowdown in headline inflation in March.
• Guidance from Governor Mihaly Varga continues to indicate that rates will likely remain on hold for a sustained period, as was broadly expected prior to the meeting.
• Among sell-side, analysts generally expect there to be limited room for easing through the remainder of the year, but high levels of uncertainty are well-noted.

The policy statement retained a cautious tone, reiterating that a careful and patient approach to monetary policy remains necessary, while Governor Varga said the Bank may keep its key rate at current level for “sustained” period. Notably, this month’s edition no longer states that there are “overall upside risks to inflation”. Instead, risks are now perceived as being two-sided, with lower commodity prices potentially supporting lower inflation on one hand, while tariff hikes and rising uncertainty across financial markets poses upside risks on the other.