MNI NBH WATCH: Rate Held At 6.5% As Expectations Remain High

The National Bank of Hungary left key interest rates unchanged on Tuesday, with the disinflationary effects of lower oil prices, government profit-margin caps and lower telecoms and bank prices seen offset by strong market services prices and the upward effect on inflation expectations of possible trade tariffs. (See MNI EM NBH WATCH: Another Rates Hold As Expectations Stay High)

As expected, base rate was left unchanged at 6.5%. The statement accompanying the Monetary Policy Council’s May decision was for the most part unchanged from April, and continued to emphasis the importance for price stability of maintaining a restrictive monetary stance. Inflation is still expected to remain near the upper bound of the central bank’s tolerance band in the coming months

“In April 2025, inflation fell to 4.2% and core inflation to 5.0%. A wide range of products contributed to the decline in the annualised consumer price index. The extent of repricings in April was above the historical average in the case of tradables and market services,” the Bank said in a statement.

“In the case of food, repricing fell short of the historical average, partly due to the official restriction on profit margins introduced in mid-March. Price expectations of both households and firms have decreased, although they have remained at high levels. Moderating expectations is key to achieving the inflation target.”