MNI NBH Review - September 2025: Rates and Guidance Unchanged

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Executive summary:

• The September MPC meeting offered no surprises. Both the 6.50% base rate and the Bank’s hawkish guidance were left unchanged, while there were only minor downward revisions to the central bank’s annual inflation and GDP projections for this year – also as expected.
• Governor Mihaly Varga explicitly stated that the monetary council's forward guidance has not changed, but perhaps more interestingly, he noted that a stronger forint was positive for inflation expectations. 
• Among sell-side, analysts expect the base rate to remain unchanged for the remainder of the year.

Governor Mihaly Varga reflected the hawkish tone of the policy statement in his post-meeting press conference. He explicitly stated that the monetary council's forward guidance has not changed, and judged inflation risks to be skewed to the upside. Perhaps more interestingly, Varga directly commented on recent forint strength, stating that while the central bank does not pursue any FX level and looks at it merely from a CPI-targeting standpoint, a stronger currency is nevertheless positive for inflation expectations. 

The tolerance for a stronger forint – and therefore a longer period of steady monetary policy – bolsters expectations that the base rate will be left untouched for the rest of the year. Among sell-side, some analysts note that a rate cut following the Spring 2026 election is most likely.